By Francis Mainoo, Deputy Managing Director, Lowendalmasaï UK, Ireland and USA

Many organisations are unaware that they have un-cancelled bank guarantees still in place. When companies conduct capital expenditure projects, banks usually insist that they take out a bank guarantee. These guarantees may have existed for many years, in different jurisdictions and under different management teams. As a result, companies may have in place many guarantees that should have been cancelled. These guarantees renew automatically every year and can impact both cash-flow and credit lines.

Clients across numerous sectors have saved vast amounts of money by claiming back bank guarantees. For example, a client in the security equipment sector managed to recoup €960,000 by removing such guarantees. The company initially had over 270 guarantees in place and 90% of these were subsequently cancelled.

Top tips for claiming back un-cancelled guarantees include:

• Undertake a thorough analysis of what bank guarantees are in force and why they are in place.• Establish which bank guarantees are no longer needed.• Collate all relevant documents including, contracts, certificates, tenders and technical evidence.• Work alongside stakeholders, including banks, beneficiaries, internal project managers, internal sales managers etc.• Cancellation requests then need to be formalised and submitted.• Once submitted, the claim needs to be monitored to ensure its progress.• The end result should be effectively communicated to key stakeholders.• Ensure a robust system is in place going forward which monitors the status of bank guarantees.

Over the past few years we have seen a significant increase in the number of clients we are advising on how to claim back outstanding bank guarantees. It is essential that companies are aware of this issue as they can release a small fortune in this way. We are keen to make firms aware of this option so that cash flows can be strengthened.