Surety Bonds (also known as Insurance Bonds) have been in existence in their current form since the 1800's, yet many businesses do not know they exist or know how they can be a viable alternative to bank guarantees or accepting retentions within contracts.
Principals have traditionally used bank guarantees and retentions as leverage and to reduce risk against Supplier performance, and for good reason. The irony is, the insistence by Principals to have in their possession bank guarantees or holding onto retention monies can force the very Supplier they are dependent on into financial distress or even into insolvency.
The good news is, Principals are accepting Insurance Bonds as an acceptable instrument to offset bank guarantees or retentions.
The credit ratings of the Insurers issuing the bonds are usually A+ or better, with a schedule of Beneficiaries that include State and Federal Government Departments, ASX listed companies, and many well-known privately held corporates.
A resurgence in utilising Surety Bonds has been occurring, with businesses swapping out existing bank guarantees and accessing previously locked up cash and freeing up equity. Directors are also releasing equity in their private assets previously leveraged against bank facilities.
To find out more about Surety Bonds and how they can help your Business,
contact Rod Fitzgerald on 1300 551 969 or rodf@thesrggroup.com.au