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As a Czech entrepreneur you may sell your products to Dutch clients. You may also buy goods from Dutch parties. The risk that your Dutch buyer cannot pay, or the risk that you cannot pay, is not always a risk that one of you wants to take. You may be asked for a bank guarantee or you may want one yourself. A few things will be good to know.
What is a bank guarantee?
A bank guarantee is an obligation of a bank to pay a specified (maximum) amount to a beneficiary. A Dutch bank of the Dutch company you sell products to, may issue the bank guarantee to you for say EUR 100,000. Normally payment will be made by the bank if the beneficiary (you) delivers a document to the bank, stating that the Dutch company did not pay you this amount (or less) when it had to pay. Other conditions may be included, for example evidence of the payment obligation. This evidence could be a court judgment that confirms that the Dutch company has to pay you. The bank will simply pay when it receives the document from you and if the conditions are satisfied. The bank will claim the money back from the Dutch company, usually a client with a bank guarantee facility or cash deposit as security.
Good to know: