Work Order Financing for Contractors

Work Order Financing is a type of financing mode that enables the contractors to become eligible for gaining credit facilities that would let the contractors execute the tenders awarded by Government/Semi Government Organizations, Autonomous bodies, and other organizations. 

To contractors, work order financing comes as a big relief as it makes them eligible to also participate in tender bids where by designing a great idea plan at a lower bid can get them a project or a big order by any authoritative organization. To understand better what all types of facilities fall under this category, here is a list:

1. Performance Guarantee: This guarantee comes into play when the tender has been accepted by a contractor. It is a guarantee in which the bank gives an undertaking to the respective authority that the contractor will either complete the project that he has taken up, or the contractor will have to pay for the damage done or the losses caused.
    
2. Financial Bank Guarantee: This will ensure that either the bank or any funding agency would enable the contractors to receive some amount of payment in advance. While taking up any tender, multiple costs are involved and it becomes extremely crucial for the contractors especially those from any SME to have some initial amount to start their project with.
   
3. OD Limit (Work Order): An overdraft limit or work order finance provides the contractors with some amount of working capital to keep their day to day operations going. As once again in the case of SMEs, it can be a bit difficult to gather enough capital in one go for the whole tender. So in such situations this kind of credit facility helps them in keeping their operations constant and providing daily capital. 

These are some of the ways how work order financing works for contractors and the particular categories that exist to help the contractors with their initial work. It must be noted by any contractor reading this that banks are not the only place to achieve work order financing, there are multiple other funding institutions like Oxyzo Financial Services that provide similar assistance, so when these traditional options are not working out, one can always look up to them to get easy financing. This kind of financing on multiple occasions turns out to be more efficient in its disbursement.

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Created on Mar 21st 2022 04:47. Viewed 163 times.

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