In order to be able to carry out a profession, to obtain a permit or even to enjoy an extension of payment, certain legislation requires you to provide a surety bond or guarantee, often in favour of a government agency. This bond will secure the fulfilment of your legal obligations. If you fail to meet them, a claim under the surety bond or guarantee can be made to indemnify your counterparty.
Typical legal bonds include customs & excise bonds, permit and licence bonds (e.g. transport or broker licences), timber bonds, environmental bonds and EU regulation bonds (e.g. agro-food bonds).
To ensure you will meet your contractual obligations, your contractual counterparty might ask for a surety bond or guarantee. The bond will guarantee that you will execute the contract on time and properly. If you don’t, your contractual counterparty can claim an indemnification. Typically a bond is required to secure the construction or maintenance of a building, the delivery of machinery or international transactions, for example.
Credendo issues many types of contract bonds such as bid bonds, performance bonds, warranty bonds, advance payment bonds, maintenance bonds and supplier bonds.
The advantages of a bond contract at Credendo are multiple:
- Credendo can issue your bond or guarantee swiftly.
- It will be beneficial for your liquidity position and bank lines: your own funds don’t need to be blocked and it will alleviate the use of your credit facility, making more money available to expand your business.