Advance payment bond

Trade finance.

An advance payment bond is a guarantee supplied by a party receiving an advance payment, to the party making the advance payment.

The advance payment bond is issued by a bank or insurance company in favour of the potential customer, to protect the customer against a contractor's failure to fulfil the contract satisfactorily.

It guarantees that the advance payment will be returned if that happens.

Also known as an advance payment guarantee.

See also

• Advance payment
• Bid
• Bid bond
• Bond
• Customs bond
• Guarantee
• Performance bond
• Retention bond
• Surety
• Surety bond
• Tender
• Trade finance