What is the difference between a Payment Guarantee & Advance Payment Guarantee?

A Payment Guarantee is a type of guarantee issued by a bank where the buyer/importer is an applicant, which assures the seller that the buyer will honor their financial obligations under the terms of the contract.

An Advance Payment Guarantee, on the other hand, is a type of guarantee that is issued by a bank where the seller/exporter is an applicant, to secure an advance payment made by the buyer to the seller. The purpose of this type of guarantee is to ensure that the advance payment is protected in case the seller fails to perform its obligations under the contract.

You May Also Like: