What is a Retention Bond?
A retention bond will provide the employer with the same level of comfort as the contract retention, but freeing up the money and returning the money to your account.
How Do Retention Bonds Work?
It’s common for retentions to be requested within construction contracts. Retention Bonds provide the employer with the same level of comfort as the retention but freeing up the money for the contractor’s cash flow.
Why Do You Need A Retention Bond
Retention Guarantee in Construction Contrats may request that they hold up to 5% of the contract value (a retention) for a period of up to 12 months. You will then have to wait for the funds to be returned at the end of the making good of defect period, this can affect your cash-flow, however a Retention Money Bond is an alternative solution.
Retention Bond vs Performance Bond
A Performance Bond focuses on the contract default and provides compensation to the Employer should there be an issue in the ability of the Contractor to complete the works. However a Retention Bond releases the contract retention from the start, aiding the Contractors cash flow and decreasing the chances of default from financial pressures. Both offer different parties different benefits and are often issued together on the same Contract.
Why Use Rayad Insure Danismanlik Ltd Sti?
The placement of a Retention Money Bond through the surety market, as alternatives to bank guarantees, can help companies by keeping bank facilities available to meet cash flow requirements.
A Retention Guarantee Bond is a written promises to pay for direct loss or damage suffered by a third party as a result of a breach of contract. Many types of bond or guarantee are available for almost any area of risk, subject to underlying security and the risk being acceptable to the guarantor.