Bank Guarantee

A Bank Guarantee records a guarantee a bank has issued on your behalf, for a tender or a performance bond, or one you have received from a customer's bank. It stores the type, the bank, the amount, the start and validity dates, the margin money and charges, and the Sales Order or Purchase Order it secures. It posts nothing; a guarantee is a contingent liability that is disclosed, not booked. Any margin deposit the bank holds and the commission it charges are posted separately by Bank Entry when the money moves. Keep the record so expiring guarantees can be renewed or released on time and the margin money reclaimed.

Margin money = Guarantee amount x Margin %; Rs 5,00,000 x 10% = Rs 50,000 held by the bank

1. 01Go to Banking > Bank Guarantee > New.
2. 02Choose Bank Guarantee Type Receiving or Providing and link the Sales Order or Purchase Order.
3. 03Pick the Bank and Bank Account, enter the Amount, Start Date, Validity in days and the margin and charges.
4. 04Save and Submit; nothing posts and the record locks.
5. 05Post the margin deposit and bank commission by a Bank Entry when the bank debits them.
6. 06Review the list by validity date each month and release or renew guarantees that are ending.

Create under Accounts > Bank Guarantee linked to a Sales or Purchase Order. Submitted guarantees lock.

A Rs 5,00,000 performance guarantee from NIC Asia for a government tender, valid one year.