Preventing Debt : Bank Guarantees

In a previous post I looked at a few options for dealing with business debt recovery. But, given the option, we’d all prefer not ot be in a position where we have to chase the debt in the first place.

One option to consider when you are potentially dealing with a new client who is likely to have high volumes of debt built up quickly with a higher risk profile is to ask for a Bank Guarantee.

A bank guarantee is a formal legal instruction to the clients bank to guarantee (using the client’s funds) a fixed sum for a particular length of time. These tend to be quite sizeable sums, upwards of £10,000 but can be for any amount.

This is a simple approach, that can provide peace of mind for both parties. It’s especially useful if the customer is new, with little trading history.

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