Banks of the Russian Federation provide different types of bank guarantees to companies, including payment or tender. There are reasons why organizations use this paid service.
First, a bank guarantee allows businesses to minimize their own risks. If one of the counterparties has not fulfilled its obligations to the other party to the transaction, the bank that issued the guarantee to him will have to pay off the debts of the unreliable counterparty.
Secondly, a bank guarantee brings a company that has received it to a new level by participating in tenders and competitions, because the cost of such a service is a certain percentage of the amount of obligations and regardless of whether the bank will have to answer for the obligations of its client or not, it must be transferred to the bank account. This means the following: the client who paid the cost of the bank's services for the provision of the guarantee is ready to bear the costs. In addition, the bank's economic security service, before issuing a bank guarantee, carefully checks the activities of a potential client, and if he passed such a check, we can talk about the seriousness of the company.
Thirdly, the cost of the bank's services for the provision of a bank guarantee is significantly lower than, for example, servicing an ordinary commercial loan, which makes it possible to direct financial resources to secure the obligations assumed to the counterparty. As an alternative to a bank guarantee, of course, you can use the services of insurance companies that provide liability insurance for default on obligations to a third party. The cost of such an insurance contract is lower than a bank guarantee, but insurers reserve the right to refuse payment for many reasons.
Fourth, a bank guarantee received from a reliable and well-known bank allows the company to work with foreign partners, because the bank, its business reputation and financial position will be the guarantor of the fulfillment of the obligations of the Russian company.
