Work Order Financing

Work Order Financing
Different Government, Semi Government and Autonomous Bodies, Corporations, Multinational

Companies and other Corporate Bodies usually invite tenders for different types of construction and other
civil works and supply of equipments/material as per specification. Work Order Finance enables
Contractor/suppliers financial accommodation in the form of Bid Bond, Earnest Money, Performance
Bond, Advance Payment Guarantee and Loan/Overdraft facility to execute the work orders.
Earnest Money
To support the eligible contractor for participation in Tender, Bank Asia Limited allows temporary
overdraft facility for purchase of SDRs/POs/DDs as earnest money in the name of SOD (Earnest
Money). SOD (EM) to be adjusted by depositing of the returned SDRs/POs/DDs against unsuccessful
bids, while from own source of the customer for successful bid.
Bid Bond/ Bid Security/ Tender Security

This facility is available at the Bank for customers, basically contractors, who are going to tender or bid
for contracts.
Performance Bond/ Performance Security/ Performance Guarantee

The successful bidder is normally required by the contract awarding agency to submit a legal document
guaranteeing completion of contract award formalities and preparedness to accomplish the contract. In
the event of failure of the contractor to perform, the awarding agency can revoke the guarantee from the
issuer.
Advance Mobilization Guarantee/ Advance Payment Guarantee

This facility enables successful Bidder to access Advance Mobilization from the contract awarding
agency towards the execution of the contract. In the event of failure of the contractor to perform, the
awarding agency can revoke the guarantee from the issuer.
Work Order Financing/Supply Order Financing:
Work Order financing is a set of financing modes allowed to the contractors to participate in tenders of
different authorities and to execute their awarded works. The following types of facilities fall under this
category –

SOD (Earnest Money)
Under this, Bank Guarantee or undertaking is issued by the Bank in the form of PO on behalf of
customers (mostly contractors) to enable to submit bid in a tender invited by different Government/
Semi-Govt. Organizations, Autonomous Bodies or other organizations acceptable to the Bank.
Bid-Bond Guarantee
Under this, Bank Guarantee or undertaking issued by the Bank on behalf of its customers (mostly
contractors) to enable to submit bid in a tender invited by different Government/ Semi-Govt.
Organizations, autonomous bodies or other organizations acceptable to the Bank.
 Bid Bond to be adjusted through return of original instrument/guarantee.
 Margin/Commission as per Bank’s rule.[ SBAC- Margin-10.00%, Commission-0.50 p.q (in most
cases]
Performance Guarantee (PG)
A Performance Guarantee is given after the tender or bid of a particular customer is accepted by the
authority. It is a Guarantee where the Bank gives an undertaking to the authority that the customer will
complete the job as per terms of the tender or to pay damage up to the Guarantee amount.
Advance Payment Guarantee (APG)

This facility is a kind of Bank Guarantee or undertaking issued by the Bank on behalf of customers
(mostly contractors) to enable to receive payment in advance against the work awarded by different
Government/ Semi-Govt. Organizations, Autonomous Bodies or other organizations accepted to the
Bank. This sort of Guarantee is needed, when the work involves initial cost like Advance Rent Payment
regarding rental of machinery and procurement cost of raw materials etc.
Retention Money Guarantee

Retention Money is a Bank Guarantee issued by the Bank on behalf of the contractors enabling the
customer to release money retained from the work awarding authority which were deducted by work
awarding authority from bills during work execution period.
Shipping Guarantee:
Under this, Bank give guarantee/indemnity to shipping company for release of goods in the absence of
shipping documents, in case goods arrive before receipt of such documents by the consignee and are
incurring demurrage or original shipping documents have been lost after retirement from Bank.
Customs Guarantee:
This guarantee is issued in favor of customs authority on account of duties/ excise duties on imported
goods and machinery or export commodities on behalf of clients.
OD [Work Order/Supply Order]

This is a funded credit facility sanctioned to meet working capital requirement enabling the
contractor for execution of work orders/supply orders awarded by different Government/ Semi-Govt.
Organizations, Autonomous Bodies or other organizations accepted to the Bank. The amount of loan
is disbursed upto a certain percentage of work order/supply order value.
 Repayment to be made through the bills receivable from the work order awarding
authority or from their other own sources acceptable to the Bank.

Work Order Financing

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Work Order Financing

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Work Order Financing

Different Government, Semi Government and Autonomous Bodies, Corporations, Multinational

Bid Bond/ Bid Security/ Tender Security

Performance Bond/ Performance Security/ Performance Guarantee

Advance Mobilization Guarantee/ Advance Payment Guarantee

Work Order Financing/Supply Order Financing:

Advance Payment Guarantee (APG)

Retention Money Guarantee

OD [Work Order/Supply Order]

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