Once you know what your buyer wants, you need to approach your bank, a surety company, surety broker or insurance broker. A bank will provide a letter of guarantee and a surety company will provide a surety bond. There are pros and cons to both types.

Letters of Guarantee are not cheap. When your bank issues a letter of guarantee, you have to pay a fee to have it issued and your line of credit is debited. This can lead to a cash flow crunch. You are also exposed to extra risks because your buyer can call the guarantee at any time without cause.

Surety bonds don’t cause as much of a cash flow crunch because, only in the most extreme cases, will a surety company demand 100 % cash collateral. As well, buyers will, at times, pay fees associated with a surety bond. On the other hand, these bonds are not as easy to get as bank guarantees.