A Bank Guarantee is a guarantee from a lending institution such as a bank ensuring the liabilities of a debtor will be met.

In simpler terms, if someone owes money but fails to pay it back, the bank steps in to cover the debt. A Bank Guarantee allows a customer, or debtor, to buy goods, equipment, or take out loans to grow their business.

Sometimes, a client might request a Bank Guarantee from a third party, like a bank. This guarantee covers a specific amount, often a percentage of the total contract value, and is valid for a set period before it expires.

In a transaction between a big company (Supplier) and a small one, the big company might request a Bank Guarantee from the small company (Customer). This is to ensure that the big company will get paid even if the small company can’t fulfill its obligations.

To access the Bank Guarantee list, go to: > Home > Accounting > Banking and Payments > Bank Guarantee

1. How to create a Bank Guarantee 

1. Go to the Bank Guarantee list and click on New.
2. Select the type whether you’re Receiving a Bank Guarantee from a Customer or Providing it to a Supplier.
3. Set the Start Date and under ‘Validity in Days’ enter the number of days the guarantee is valid for.
4. Select the Sales Order or Purchase Order depending on step 2.
5. The Customer/Supplier and the Amount will be fetched automatically.
6. Select a Bank and the Bank Account.
7. Enter a Bank Guarantee number and name of the beneficiary.
8. Save and Submit.

This document helps you monitor Bank Guarantees provided to suppliers and received from customers. You can configure email alerts to notify you as the expiry date of the Bank Guarantee approaches, prompting you to retrieve the Bank Guarantee from your client.

1.1 Additional Options when creating a Bank Guarantee

2. Related Topics

1. Chart Of Accounts
2. Sales Order
3. Purchase Order