Advance payment bond

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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