An Advance Payment Bond is a guarantee, supplied by the Contractor or Sub-Contractor receiving an advance payment from the Employer advancing the payment. It provides that the advanced sum will be returned if the agreement under which the advance was made cannot be fulfilled. They can also be called Advance Payment Guarantees.
This type of Bond enables payment of cash to be made in advance of work being carried out, usually for the purchase of materials, they provide significant cash flow benefits to the contractor, giving them the opportunity to fabricate offsite if required and providing a level of comfort for the beneficiary of the Bond.
Provide us the details of the Contract which is the subject of the Advance Payment Bond requirement, including Bond amount and period for which it will be required, together with a completed application form plus:
On receipt of this information, the Advance Payment Bond application will be submitted to our panel of underwriters for their consideration. Our underwriters will review the applicant’s financial strength, their historic trading performance comparative to the underlying obligations of the Bond. Upon successful underwriting, we should be able to offer competitive non-binding indications of terms, as quickly as possible.
Once the applicant has accepted our terms and provided any additional information requested, we will send out the security documents for execution (such as the deed of counter indemnity) and an invoice for the premium.
Following receipt of the completed paperwork and premium, we will issue the Advance Payment Bond
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An Advanced Payment Bond is a guarantee, supplied by the party receiving an advanced payment, to the party advancing the payment.
Road & Sewer Bonds are required by a Local Authority or Water Authority, they cover the Council or Water Authority if they need to construct/repair the Road or Sewer.
A Construction Performance Bond is a guarantee, typically with a value of 10% of the contract price and is designed to offer protection to the beneficiary.
A Retention Bond will provide the employer with the same level of comfort as the retention, but the contractor / has the benefit of retaining the cash.