NDK also provides several other financial services such as Letters of Credit, Performance Guarantees, Bid Security and Advance Payment Guarantees
Letter of Credit
NDK can establish a Letter of Credit to guarantee that a seller will receive payment in full from its customer as long as certain delivery conditions have been met. In the event that the buyer is unable to make payment on the purhase, NDK will cover the outstanding amount.
A letter of credit guarantees payment of a specified sum in a contract, provided the customer meets precisely-defined conditions and submits the prescribed documents within a fixed timeframe. These documents almost always include a clean bill of lading or air waybill, commercial invoice, and certificate of origin.
NDK can issue a surety on behalf of a contractor to the contract-awarding institution, guaranteeing that the contractor will perform all of his obligations under the contract.
A performance guarantee is a promise made that either a service lives up to certain expectations, or that a product will continue to perform well over a specific time frame.
NDK can issue a Bid Security on behalf of a customer (also a bidder) which assures and guarantees that should the bidder be successful, he will execute the contract and provide the required surety bonds.
Bid security is a form of risk insurance used in the construction industry. By submitting a bid bond along with a construction bid, a contractor is providing a legal guarantee that he will sign a contract if it is awarded to him.
If a bonded contractor does not sign the contract when offered, he may face both financial and civil penalties.
Advance Payment Guarantee
NDK can issue an Advance Payment Guarantee which makes it possible for a customer to recover any advance payments extended to a contractor in the event that the contractor fails to abide by the terms and conditions that govern the purchase of goods or services.
This guarantee may be used in a number of situations, including deals where goods are imported or exported. It is also used with domestic transactions, such as the purchase of heavy equipment and construction projects.