Besides arranging bank bid bonds, performance bonds and APG via Ableways International are household arrangements that are usually undertaken in the company. These are all forms or types of bank guarantees and Ableways arranges these services on behalf of its customers through reputable banks in Kenya. Performance bonds are needed to protect the employer against a bidder’s conduct which would warrant forfeiture of the contract while advance payment guarantee helps a contractor to secure upfront payment for a contract that has been awarded by the employer/procuring entity (a third party) but not yet executed by the contractor. The employer/procuring entity will therefore demand a security (the advance payment guarantee from the bank) for paying the contractor in advance to protect himself against the contractor’s conduct which would present a financial loss to the employer and the forfeiture of the contract by the contractor.
At Ableways International Limited, we are very well versed with the process and the requirements for both performance bond bank guarantee and advance payment guarantees (APG). Banks in Kenya and micro finance banks that have been licensed by Central Bank of Kenya to do ‘Banking Business’ usually require that the facility is covered 100%. We beg to do to things in a different way. We will usually adopt a structured case by case arrangement whereby we will assess the customer’s application based on a number of terms namely:
- Who is the client (contractor/supplier
- Who does the client bank with, can the statements be confirmed and how are the total debit/credit balance looking on average within a given period (6 months)
- The client’s aging list of debtors and creditors
- Substandard minimum requirement to get the job done, up to a point where the client is able to raise the first invoice
- Key staff and their qualifications
- Available machinery/facilities to assist the contractor/supplier to undertake the job satisfaction.
- Previous jobs of similar magnitude done and completed satisfactorily.
- Comparison of the audited financials within two years
The above forms part of the evaluation that we undertake to ensure that performance bonds and APG are above board. To do this, the contractor/client will be required to submit to us the following copies of documents:
- Copy of incorporation
- Copy of PIN/VAT
- Copy of Memorandum and Articles of Association
- Copy of Tax Compliance
- Copy of City Council License
- Copy of latest 6 months certified bank statements
- 2 years latest audited financials
- Past jobs done – Copies of award letters, performance and APG copies, payment certificates which should be traced in the bank statements as well as completion certificate.
- Aging list of debtors and creditors for 90 days (latest)
All these documents are in line with the KYC Policy that requires all financial (both bank and non bank financial institutions) to maintain a strict KYC for their clients. With these documents, it is possible for us to be able to analyze the client quickly within hours. For performance bonds, the client will be required to put in between 20% – 50% of the value of the performance bond as a refundable cash cover (security). Ableways International Ltd will secure the other 50% of the value of the guarantee with the bank. We have three banking partners, one micro finance bank and a number of insurance companies. Our service charges are very friendly and they are usually on a case by case basis.
Advance payment guarantees are also arranged via Ableways International. There are two ways of approaching advance payment guarantees. The first one is whereby the contractor needs to be paid upfront for the jobs so that the payment is guaranteed once the contractor completes the contract. This is the ideal situation and the charges are cheaper and negotiable. We will usually process the guarantee through our bank and the money will be wired to the bank. Once the contractor completes the job, he can present the original guarantee to us and we will have it cancelled and money transferred to a bank of the contractor’s choice. The second way is whereby the contractor needs to access the money immediately. In this option, the contractor will be required to open an account with one of our banking partners where we will arrange the guarantee from; as well as introduce Ableways International as a mandatory signatory into the account. Additionally, the contractor will need to give requisite security acceptable to us for any amounts that they are accessing.
This forms part of the detailed process of arranging both performance bonds or advance payment guarantees with Ableways either through bank or insurance. We therefore invite contractors and suppliers alike to Ableways International Limited about the bank guarantee needs