The Guarantee Insurance modality for Advance Payments works as a protection for companies that need to invest in a project and want to be sure that the advance amount will be properly applied, as agreed in the contract.
To better understand the advantages of this insurance category and learn how it works in practice, we have prepared an exclusive article and highlighted some important points.
Shall we check?
What is Guarantee Insurance for Advance Payments?
In general, a Surety Bond aims to ensure that the clauses of any contract of the company are fulfilled, including in cases of bankruptcy of the contractor.
In the case of the Advance Payments modality, the logic is the same, in which the contracting party is guaranteed compliance with the agreement in relation to the use of the anticipated amount.
In other words, the Guarantee Insurance for Advance Payments will ensure that the anticipated investments made in a contract for the provision of services, construction, supply of materials or any other activity, are duly fulfilled and used for the established purpose.
For example, if a company makes the purchase of equipment, in which the agreement with the supplier requires the anticipation of 30% of the value for the purchase of inputs, the Guarantee Insurance for Advance Payments will guarantee that this amount is not used for any any other purpose than the one previously agreed upon.
And what are the practical advantages of this modality?
In addition to guaranteeing the due use of the anticipated amount, the Guarantee Insurance for Advance Payment adds many other practical benefits to both parties to the contract.
Below, we highlight some of them. Check out!
Agreement security
The Advance Payments modality in a Guarantee Insurance guarantees that the insured is indemnified by the broker, in case the anticipated amount is not settled as provided for in the contract.
This has a direct impact on the investment in question, but also acts as a protection for the company's financial health.
Cost benefit
Another advantage of the Guarantee Insurance for Advance Payments is related to the excellent cost-benefit of its contract, considering that, in general, such a policy is usually smaller than a bank guarantee, for example.
This is explained precisely by the fact that the insurance is not linked to a banking operation. Therefore, there is no direct link with interest rates or other charges commonly inherent to banking services.
Finally, any compensation that may become necessary will certainly cover all costs invested in contracting the guarantee insurance.
Practical and agile quotation
Unlike a bank guarantee, the Guarantee Insurance for Advance Payments offers more practical and flexible quotes, making it possible to obtain faster returns just with a pre-registration and simplified credit analysis in the company's CNPJ.
In summary, these are the main advantages of Surety Bond for Advance Payments and how this modality can be applied in practice. In addition to all the benefits mentioned above, this category can add many other benefits and security to your company's contracts.
So, take the opportunity to talk to a specialized broker and discover other protections that the company offers!
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