It is common for an overseas buyer to require you, as their supplier, to provide bonds (or guarantees) as part of a contract.
Bonding is also often a prerequisite for Australian subcontractors providing goods or services as part of domestic export-related contracts. Bonds give your overseas buyer assurance that you can deliver your products or services on time and adhere to your obligations under the contract. Being able to provide bonds and guarantees to potential overseas buyers can help you to compete more effectively and unlock working capital, which can help you to finance additional export contracts.
The types of bonds and guarantees that you may need to provide are:
- Tender or bid bonds that give your buyer an agreed sum of money if you win a tender for an export contract but then fail to enter into the contract
- Advance payment bonds that provide your buyer with security for their advance payment under an export contract
- Performance bonds that give the buyer of your product or service assurance that if you don’t meet your obligations under a contract, the buyer can call on the bond to reduce its losses.
- Warranty bonds that protect your buyer from loss if your product or service doesn’t meet the contractual warranty obligations after the contract is completed.
- US Surety bonds that allow you to meet your US bonding requirement and compete more effectively by supplying a surety bond from our registered US surety bond issuer, Liberty Mutual Insurance. Information on how Efic may be able to provide assistance can be found on our product pages.
Information on how Efic may be able to provide assistance can be found here.