What is direct bank guarantee in SAP FIN-FSCM-TRM - Treasury and Risk Management?

SAP Term: direct bank guarantee

• Component: FIN-FSCM-TRM

• Component Name: Treasury and Risk Management

• Description: Bank guarantee issued by the applicant's bank issuing bank directly to the ganrantee's beneficiary without involving a correspondent advisingbank.

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• Key Concepts: 
  A direct bank guarantee is a type of financial instrument used in SAP Treasury and Risk Management (FIN-FSCM-TRM). It is a guarantee issued by a bank on behalf of a customer to a third party, usually a supplier, to ensure payment for goods or services. The bank guarantees that the customer will pay the supplier the agreed amount, even if the customer fails to do so. 
  
  How to use it: 
  In SAP Treasury and Risk Management, direct bank guarantees can be used to manage risk and ensure payment for goods or services. The bank issuing the guarantee will typically charge a fee for this service. The customer can then use the guarantee to secure payment from the supplier, who can then be assured that they will receive payment even if the customer fails to do so. 
  
  Tips & Tricks: 
  When using direct bank guarantees in SAP Treasury and Risk Management, it is important to ensure that all parties involved are aware of the terms and conditions of the guarantee. This includes any fees charged by the bank, as well as any deadlines or other requirements that must be met in order for the guarantee to remain valid. 
  
  Related Information: 
  Direct bank guarantees are just one of many financial instruments available in SAP Treasury and Risk Management. Other instruments include letters of credit, surety bonds, and derivatives. Each instrument has its own advantages and disadvantages, so it is important to understand which one is best suited for your particular needs.