Bank guarantees

Bank Guarantee is a new concept in the Trade Management module of Common. It is similar to the Letters of Credit concept, but it is less restrictive. A Bank Guarantee can be defined as an independent documentary undertaking by which the guarantor (a bank or legally qualified entity), issues, at the request of the customer (instructing party), its irrevocable guarantee to pay a sum of money to the beneficiary (a third party), provided a complying document is presented.

In LN, the Bank Guarantee concept can be enabled in the Financial Parameters (tcgtc9199m000) session. The session includes these parameters:

  • Parameters to create Beneficiary and Applicant type bank guarantees and specific trade types for Export, Import, Domestic Outbound and Domestic Inbound.
  • A number group and series for the different trade types of bank guarantees.
  • Reason codes for exceeding the maximum amount of the bank guarantee during linking.

For each trade type and kind of bank guarantee (accessory or independent), bank guarantee master data types must be specified in the Bank Guarantee Types (tcgtc0115m000) session. Additional master data can be specified in the Costs (tcgtc0116m000) and Cost Sets (tcgtc0118m000) sessions, which identify how much a bank guarantee may cost or the fees for obtaining it. The Actions (tcgtc0117m000) session enables you to track the actions assigned to users for the creation and completion of the bank guarantee.

Bank guarantees can be created in the Bank Guarantees-Beneficiary (tcgtc0660m200) and Bank Guarantees-Applicants (tcgtc0660m300) workbenches. User authorization sessions are available to specify approval limits and authorizations for changing the status.

These user authorization sessions are available:

  • User Authorizations for Bank Guarantee - Beneficiary (tcgtc0104m000)
  • User Authorizations for Bank Guarantee - Applicant (tcgtc0104m200)

Depending on the trade type, bank guarantees can be linked to logistics transactions such as Sales Orders, Purchase Orders, and Contract Deliverable Lines. One or multiple bank guarantees can be linked to a logistic transaction.

These features are also applicable for bank guarantees:

  • Statuses are available for the bank guarantee to monitor the process of obtaining the guarantee and ensuring that all participants have the signed version.
  • Amounts are consumed on the bank guarantee when orders are linked and receipts or shipments are confirmed.
  • During linking, compliance checks are executed for the bank guarantee to verify if the amount available for linking is not exceeded (based on an indicator on the bank guarantee).
  • Users can specify if advance or installment amounts can be excluded from the amount to be checked and consumed on the bank guarantee.