Advance payment guarantee
Chapter 3 - Cotton marketing - The role of banks in cotton
export finance
The buyer of the cotton demands an advance payment guarantee to ensure that any advance payment on the contract made before delivery of the goods will be reimbursed if the exporter fails to meet some or all of its delivery obligations. The advance payment guarantee is issued by the bank at the request of the exporter and may be counter-guaranteed by the buyer’s bank. An advance payment guarantee may also be issued in the form of a standby L/C.