 |
The
Exporter and the Importer sign a contract in which the Importer agrees to
provide a percentage of the contract value as a down payment to the
Exporter. |
 |
The
Exporter agrees to provide an Advance Payment Guarantee to guarantee the return
of the Advance Payment in the event they fail to complete the
contract. |
 |
The
Exporter requests issuance of the Advance Payment from his or her bank. This
guarantee will only become operative once the Importer remits funds to the
Exporter's bank. |
 |
The
Exporter's bank checks the creditworthiness of the Exporter and agrees to issue
the guarantee. |
 |
The
Exporter's bank issues the Advance Payment Guarantee direct to the Importer, if
acceptable. |
 |
The
Exporter's bank uses the service of the Importer's local bank to: |
|
a)
Advise the Exporter's bank guarantee to the Importer. |
|
b)
Issue the local bank's own guarantee to the Importer. |
 |
The
Importer receives: |
|
a)
Advice of the Exporter's bank guarantee i.e. is dependent on Exporter's bank to
pay. |
|
b)
Advice of local bank's guarantee i.e. is dependent on own local bank to
pay. |
