Advance on Purchase Order/Contract

Advance on purchase order or contract is an advance made by the bank to a client to enable them to carry out a purchase order or a contract. In this case, the claim has not yet arisen (service not yet performed for an existing contract).

ADVANTAGES

Relieving the company's cash flow, knowing that the payment details in such contracts are generally very long.

CHARACTERISTICS

• Rate: From 8 to 12% exclusive of taxes
• Duration: 3 to 6 months renewable
• Amount: Maximum 80%; minimum 10 million exclusive of taxes
• Repayment: outstanding balance and interest at the time of repayment
• Documents to provide:

  • The contract or purchase order;

  • Verify if the client has already received an advance;

  • Certificate of good execution of previous purchase orders or contracts carried out to mitigate the performance risk;

  • State of ongoing (order book) and upcoming (upcoming market) contracts;

  • Disbursement and repayment procedures (present the payment terms included in the GC);

• NB: In the case of public works and generally for large counterparts, the execution schedule of the works, the progress report of the works, the operating account, the list, and CVs of the technical staff, etc., can be requested.
  
  
• Guarantees: Firm and irrevocable commitment to domiciliation of payments for the contract or purchase order; Pledge of the contract; retention guarantee ranging from 5% to 15% of the granted amount; Shareholders' CPS (Corporate and Professional Services).