Advance Payment Bond
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An Advance Payment Bond is a guarantee, supplied by the party receiving an advance payment, to the party advancing the payment. It provides that the advanced sum will be returned if the agreement under which the advance was made cannot be fulfilled. They can also be called Advance Payment Guarantees.
As these bonds enable payment of cash to be made in advance of work being carried out they provide significant cash flow benefits to the contractor, giving them the opportunity to fabricate offsite if required and also providing a level of comfort for the beneficiary of the Bond.