Retention Money Guarantee
During the period of any contract, some employers can withhold between 5% to 10% of the value of every payment made to the contractor. This is known as retention money and is used to cover any remedial work. A retention money guarantee frees up this retention money and stands in lieu of the retention money instead of the employer withholding the aforementioned percentage. This will help improve a contractor’s cash flow for the duration of the project and assist in achieving profit in cash before the maintenance period is over.
Why choose Blenheim for your construction guarantees?
- Specific expertise in raising retention money guarantees from leading insurers which are approved by all employers in South Africa.
- FREE Professional Advice for all your construction guarantee queries by an experienced and knowledgeable team.
- FREE Letter of Intents to ensure you are always one step ahead in your tender applications.
- All draft and original guarantees issued within 24 – 48 hours*
- Immediate Guarantee Exposure reports generated via our tailored made software for your convenience.
- Dedicated account manager assigned to you, to ensure a personalised service.
- Timely and hassle-free collateral reimbursements.
- No annual fees.
It depends on the strength of your financial statements.
Premium can be between 1 to 3.5% ex vat paid upfront,
pro-rata, per annum. The minimum invoice period is for 6
months.
Here is an example and is for illustration purposes
only. Let’s assume you have won a R5,000,000 project
requiring a 10% performance guarantee of R500,000 for 11
months. We will further assume that you qualify for 2%
ex vat premium. The cost would be R500,000*2%/12*11 =
R9,166.63 paid upfront and once-off.
A quotation usually takes 24 – 48 hours to finalise,
subject to all information being received and, with all
the correct documentation completed and information
submitted, the facility can be put in place within four
to seven working days.
With the facility in place, a guarantee is issued within
24 to 48 hours. Your facility can then be used for all
your future guarantees up to a prescribed facility limit
and multiple guarantees can be issued.
Remember we can still issue a letter of intent and draft
guarantee during the setup of your guarantee facility.
Provided sufficient documentation has been received.
Banks normally take 100% collateral and still charge
fees to have a guarantee facility in place. Our insurers
offer lower collateral requirements and you pay only for
the guarantees you require. There are no annual fees for
having a facility in place via Blenheim.
A guarantee facility separate from the bank will enable
your company to grow since your financing can be handled
by the bank and we do your guarantees.
The requirement for the retention money guarantee is
dependent on the agreement or contract entered into
between the contractor and employer.
The retention guarantee is usually put in place in one
of three ways:
- At the start of the contract and retention is waived for each payment certificate.
- At Practical Completion and the certificate is to be provided.
- At Final Completion and the certificate is to be provided.
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