Bank Guarantee

A Bank Guarantee is a guarantee from a lending institution such as a bank ensuring the liabilities of a debtor will be met.

In other words, if the debtor fails to settle a debt, the bank covers it. A Bank Guarantee enables the customer, or debtor, to acquire goods, buy equipment or draw down loans, and thereby expand business activity.

A client may ask you to provide a Bank Guarantee from a third party such as a Bank. This guarantee is for a specified amount, which is usually a percentage of the total value of the contract. The Bank Guarantee is valid for a specified duration after which it expires.

In a transaction between a large organization and a small organization, the larger organization (Supplier) is at risk of not receiving the money owed for providing Items/Services so it will receive a Bank Guarantee from the smaller organization (Customer). A Bank Guarantee ensures that the larger organization gets money in case the smaller organization is not able to deliver.

To access the Bank Guarantee list, go to:

Home > Accounting > Banking and Payments > Bank Guarantee

1. How to create a Bank Guarantee

  1. Go to the Bank Guarantee list and click on New.
  2. Select the type whether you're Receiving a Bank Guarantee from a Customer or Providing it to a Supplier.
  3. Set the Start Date and under 'Validity in Days' enter the number of days the guarantee is