A fuel guarantee is security provided to the Fuel Company against default payment made by the Commercial Customer for fuel products delivered by the Fuel Company.
How does it work
The guarantee enables the Retailer to trade on a debit order system (ACB) and the Commercial Customer to enjoy Credit Terms. Without a fuel guarantee, the retailer/commercial client effectively trades on a “hard cash” basis.
Note: The Fuel Guarantee is limited to the respective Fuel Companies that have entered into an agreement with CGIC.
TYPES OF GUARANTEES INCLUDE:
FUEL GUARANTEES FOR COMMERCIAL CLIENTS
• Payment for fuel on credit terms instead of pre-payment (hard cash)
• Existing Bank Guarantees can be replaced which will release valuable capital or assets tied up with the Bank.
• Commercial clients include transport companies, mines, wholesalers, distributing agents, etc.
FUEL GUARANTEES FOR RETAILERS
• Payment for fuel via ACB debit instead of pre-payment
• Premium written off against taxable income
• No assets nor cash collateral required as security
• Capital in the business can improve cash flows and reduce any loan risks or trading risks
• Existing Bank Guarantees can be replaced or topped up (if insufficient) to free up assets
• Opportunity cost
• Back-to-Back Guarantees
Note: Strict underwriting standards will apply to commercial customers.