Advance payment bonds 

 Advance payment bonds 

At the start of an export contract, your overseas buyer may agree to make an upfront payment to you in advance of receiving delivery of your goods or services. While this provides you with cash to finance the export contract, your buyer may need assurance that their funds will be returned if you don’t complete the contract. An advance payment bond gives your buyer security for their advance payment. As a result, the ability to offer a buyer an advance payment bond means you can compete more effectively for contracts in the global market.

The value of a bond that your buyer requires may be a significant percentage of the contract value. To issue the bond, your bank may require security for its full amount, tying up too much of your working capital and preventing you from pursuing other opportunities. If your bank can’t help you with a bond, or you can’t provide the full amount of security they require, Efic may be able to assist. If you meet our eligibility criteria, we can issue the bond to your buyer directly or in conjunction with your bank.

Our security requirements are based on an individual assessment of your ability to perform the export contract, and the value of the security we require may be less than the amount of the bond. This enables you to give your buyer assurance that their advance payments are secure without tying up all your working capital.  

What are the benefits?

  • Enables you to compete more effectively in global markets
  • Frees up your working capital
  • Flexibility: a bond can be issued directly by Efic or in conjunction with a bank

How does an advance payment bond work?  


Work flow diagram for advance payment bond 

  1. You enter into an export contract with your overseas buyer which requires an advance payment bond
  2. If your bank can’t help you with an advance payment bond, you apply to Efic for issue of the bond.
  3. If Efic approves your application, you provide security to Efic
  4. Efic issues the bond directly to your buyer. Alternatively to 4:
  5. and 6. If your buyer requires your bank to issue the bond, Efic provides a guarantee to your bank for the value of the bond. The bank issues the bond to your buyer.

Terms and conditions 

Terms and conditions will be negotiated during the application process. The following guidelines provide an indication of typical requirements:


You should be an Australian exporter producing goods or services for export which have substantial Australian content.

You should demonstrate that you have the managerial, technical and financial capability to satisfy the contractual obligations covered by the bond.


The bond remains in force for the term required by the export contract.

Fees & charges 

Fees and charges vary depending upon a number of factors including Efic’s risk assessment, term and security.


The security required will be determined by Efic based upon our credit and performance risk assessment.

Efic will require recourse to your company and may require recourse to company directors and related companies.

NOTE: Information on terms and conditions is supplied as a guideline only. Efic’s compliance with legislation and OECD guidelines, together with its credit assessment and other policies, influence the actual terms and conditions that may be applicable to any eventual transaction with Efic.

The information provided does not comprise advice or a recommendation and Efic makes no representation or warranty relating to it. To the maximum extent permitted by law, Efic will not be liable for any direct or indirect loss or damage incurred by any person on the basis of this information.