Monthly Archives: July 2023

FINANCIAL PROTECTION TO SELLERS OF GOODS OR SERVICES IN BUSINESS TRANSACTIONS IN THE EVENT OF DELAYED PAYMENT FROM THE SIDE OF BUYERS

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The best way to protect yourself as service providers, contractors or vendors against the risk of failure to receive payment upon delivery is to demand for some “Typical” Guarantee or Bond from BUYER. These guarantees and bonds are to be procured before delivery is made to the BUYER.
The execution of GUARANTEES or BONDS creates three parties as follows:

Buyer = Project owners (Primary Obligor)

Seller = Contractors, Vendors, Suppliers, exporter (Beneficiary)

Surety/Guarantor = Bank or Insurance Companies

These ”typical” Guarantees or Bonds are issued by the Surety/Guarantor at the request of the BUYER upon payment of Premium (%) of Contract Value.

The SELLER can demand for any of the financial guarantee and bonds listed below for protection the protection of their payment

(1) Deferred Payment Guarantee

(2) Letter of Credit (Inland or Foreign)

(3) Post Dated Cheques

(1) DEFEERED PAYMENT GUARANTEE

This is an assurance to the SELLER that BUYER will pay for goods supplied on a specific date. That is, BUYER will commit to a specific period in which all outstanding payment will be paid to beneficiary.

The maximum credit days (the specific date to pay) in DPG should be maintained at 90days

The seller offers credit to the buyer and buyer’s bank guarantees the due payments to the seller.

Perform = Payment

The Guarantee is issued by the Bank or Insurance company at request of BUYER in favour of SELLER

(2) LETTER OF CREDIT (LC)
Letter of Credit is a promise or commitment in writing made by a bank to a particular seller that payment will be made to the seller if the seller completes performing whatever is mentioned in the letter of credit. Payment here is not trigger by SPECIFIC DATE, payment is trigger once DELIVERY is made to BUYER. Letter of Credit is only used in foreign transactions. The type of Letter of Credit used for domestic transaction is called INLAND LC

LC is a form of Guarantee and is issued by the Bank or Insurance company at request of BUYER (local or foreign) in favour of SELLER

(3) POST DATED CHEQUES
Postdated cheque is one that is written with a future date indicated on it. This is usually done to account for an anticipated delay in deposit.

In Nigeria, like any ordinary cheques, post-dated cheques have a validity of 3 months from the date of issuance.

Post Dated Cheque is not a Guarantee issued by the Bank or Insurance company but rather an understanding between BUYER and SELLER to take advantage of illegal issuance of Post-Dated cheque without sufficient funds as a form of Guarantee for payment

*Knowledge shared here are for Sales and Marketing team of an organization or any individual assuming such a roles.

FINANCIAL PROTECTION FOR BUYERS OF GOODS OR SERVICES IN BUSINESS TRANSACTIONS IN THE EVENT OF PERFORMANCE FAILURE FROM THE SIDE OF SELLERS

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The best way to protect yourself as “project owners” is to demand for some “typical” Guarantee or Bond from potential service providers, contractors or vendors against the risk of non-performance or undue delay in project completion. These guarantees and bonds are purchased before contract is given to the SELLER.

The execution of GUARANTEES or BONDS creates three parties as follows:

Buyer = Project owners (Beneficiary)

Seller = Contractors, Vendors, Suppliers, exporter (Primary Obligor)

Surety/Guarantor = Bank or Insurance Companies

These “typical” Guarantees or Bonds are issued by the Surety/Guarantor at the request of the SELLER upon payment of Premium (%) of Contract Value.

The Project owners can demand for any of the financial guarantee and bonds listed below for their protection in case of delay or non-performance from service providers, contractors or vendors

(1) Bid or Tender Bond
(2) Performance Bond or Guarantee
(3) Advance Payment Bond or Guarantee
(4) Warrantee or Maintenance Bond
(5) Counter Guarantee

(1) BID OR TENDER BOND

This is an assurance to the BUYER that SELLER will not withdraw its bid before conclusion of the bidding process and that SELLER is financially Capable to undertake the project should it be awarded to them and that SELLER will be able to get a performance bond if chosen to do the job. These bonds are usually between a Premium of 2% and 5% of the total contract value. The Premiums may be lower for projects with higher values or SELLERS who have good credit scores.

If a bid or tender bond is in place however, in the event of the contractor falling through, the supplier would be awarded the value of the bond as a penalty against the contractor.

(2) PERFORMANCE BOND OR GUARANTEE
Issued to a Project owners as a condition precedent for execution of a Contract needed after successful acceptance of bid and may raise the need for Advance Payment Guarantee (APG)

This is an assurance to the BUYER should there be delay of failure to PERFORM, the SELLER will take over the responsibility to PERFORM by engaging another SELLER

Performance Bond value is usually a Premium of 10% of the Contract Sum (this is not sacrosanct and may vary in accordance with the Contract Particulars). The Premiums may be lower for projects with higher values or SELLERS who have good credit scores.

If it’s a Bond, the BUYER will demand for Financial Compensation from the Bank that issued the BOND irrespective of whether there is performance or not. If it’s a Guarantee, the BUYER will have to present a case of NON-PERFORMANCE before the Bank can pay,

In a standard BID Process where emphasis on Performance is made, Performance Bond will take-over from a Tender Bond where such exist. The Two cannot be in existent at same time.

A performance bond are introduced as security for job completion and is usually issued by thee bank or insurance company of the SELLER.

Perform = Satisfactory completion of a project

(3) ADVANCE PAYMENT BONDS OR GUARANTEE
Issued to a Project owners as a condition precedent to payment.

An assurance that the SELLER will refund any advance payments that have been made to the BUYER in the event that the product/project is unsatisfactory. APG enables the SELLER to recover Advance Payment already paid to BUYER in the event the SELLER is unable to perform or fulfill obligations under Contract

This will provide protection to the Buyer when an advance or progress payment is made to the Seller prior to completion of the contract

(4) WARRANTY OR MAINTENANCE BONDS
An assurance that SELLER will pay to the BUYER an amount of money in case the warranty obligations for products that are provided are not met. This means, the such payment received by BUYER will serve as a substitute for a filed warranty.

The bond is returned by the buyer at the end of the warranty period if the product that is provided has met the specifications.

(5) COUNTER GUARANTEE
This is similar to Performance Guarantee except that it is only needed when bidding for project in foreign countries In involve two banks: The local and foreign banks.
A cross country guarantee in the form of guarantee for guarantee given by another Bank

NOTE. A Bond can either be On-Demand or Conditioner

On-demand bonds :
Value set out in the bond is immediately paid on a demand

Conditional bond :
There is only liability if there is a breach of contract (or certain event has occurred as set out in the bond)

*Knowledge presented here are useful to The Procurement Unit of an organization or any individual assuming such role

Time Perspective as a Useful Strategy to Achieve Success

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The most successful people in any society are those who take the longest time period into consideration when making their day-to-day decisions. TAKE LONG TIME BEFORE A MAJOR DECISION
We can look at Time Perspective from Plant Trees and Doctors Training perspective to get a quick clue.


Plant Trees
What Banfield found was that the higher a person rises in any society, the longer the time perspective or time horizon of that person. People at the highest social and economic levels make decisions and sacrifices that may not pay off for many years, sometimes not even in their own lifetimes. They “plant trees under which they will never sit.”


Doctors
An obvious example of someone with a long time perspective is the man or women who spends ten or twelve years studying and interning to become a doctor. This person takes extraordinarily long time to lay down the foundation for a lifetime career. And partially because we know how long it takes to become a doctor, we hold doctors in the highest esteem of any professional group. We appreciate and admire the sacrifices that they have made in order to be able to practice a profession that is so important to so many of us. We recognize their long time perspectives.


Long Time Perspectives
People with long term perspectives are willing to pay the price of success for a long, long time before they achieve it. They think about the consequences of their choices and decisions in terms of what they might mean in five, ten, fifteen, and even twenty years from now.

Short Time Perspectives
People at the lowest levels of society have the shortest time perspectives. They focus primarily on immediate gratification and often engage in behaviors that are virtually guaranteed to lead to negative consequences in the long term. At the very bottom of the social ladder, you find hopeless alcoholics and drug addicts. These people think in terms of the next drink or the next fix. Their time perspective is often less than one hour.


Delayed Gratification is the Key to Financial Success
Your ability to practice self-mastery, self-control, and self-denial, to sacrifice in the short term so you can enjoy greater rewards in the long term, is the starting point of developing a long time perspective. This attitude is essential to financial achievement of any kind.

Action Exercise
Practice a long term perspective in every area of your life, especially in your financial life but also with your family and your health. Think of where you would ideally like to be in five years and begin today to take steps in that direction.

Tracking Traffic Offenders in Lagos with Technology Driven Device anchored on Mobile and Fixed Cameras

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It’s no longer news that Lagos State Government has introduced two technology driven cameras till date. Vehicle owners are advised to regularly visit the two platforms to check for any possible Traffic Offense Billing for onward PAYMENT or CONTEST.

The two technology driven platforms are:

(1) Mobile Body Cameras (Traffic Management System TMS) – Operated by LASTMA
You can either use your Vehicle plate number, Violation number or Ticket number to search for any pending traffic offense bill

https://tms.lagosstate.gov.ng/Mobile/mClientHome.aspx

(2) Fixed Traffic Camera (PayVis ) – Operated by VIO
You can either use your Vehicle plate number or Bill number to search for any pending traffic offense bill

https://payvis.ng

(1) Traffic Management Solutions (TMS)

Traffic Management Solutions Devices was deployed in May 2023 to enable evidence-based prosecution of traffic violators.

Previously (July 2021) body cameras was employed, but the latest deployment will ensure that traffic offenders are captured from a distance.

The technology is a solution to LASTMA officials having altercations or struggling or trying to make arrests of motorists causing infractions on the road. Now, this camera captures traffic infractions from a distance. That means the LASTMA official will not be closer to you this time around before capturing you if you commit any traffic infractions.”

Notice in the form of video evidence will be sent to the traffic offender to justify infraction committed.
Traffic offenders can contest the video evidence. Under the video, you have three buttons there. One is to challenge it if you want to challenge it, probably you have the feelings that you have not committed such offense, you will be charged to a mobile court.

TMS has a learning modules with easy to assimilate animated representations of traffic laws and the effects their violations

TMS also has the Eyewitness function which allows road users the opportunity to also play a role in reducing traffic gridlocks by reporting observed traffic offenses, vehicle breakdowns, dysfunctional traffic lights, faded road markings etc, positioning everyone as a potential change maker in the traffic situation.

TMS also has a beautiful Mobile App, available for download from the Google Play Store and the App Store, which makes all these functions very easily available on mobile devices.

(2) PAYVIS (Plate Detection Platform)

PayVIS is a technology- driven plate detection platform that will capture plate number of traffic offenders and bill them. It was introduced in the January 2021.

VIO is in charge of its management

The cameras are located besides traffic lights to capture traffic offenders without the presence of traffic officials. The Camera will take photo shot of offenders plate number and run a scan on Lagos State Database to detect prior traffic offenses or expired vehicle papers so as to add it up to offenses committed.

NOTE, you can contest the bill

How to contest your bill under PayVIS Platform

  • Please search for your bill using either your Vehicle Plate Number or Bill Number
  • Click on the “Contest Bill” button
  • Upload your evidence of valid documents to seek redress. If your application is denied, ensure payment is made within Seven (7) days to avoid further sanctions

Nigerian Banks Lift Suspension on International Transactions With Naira Cards

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“Wema Bank is the first to officially announced the lifting while other banks in Nigeria are expected to follow suit”.

“If we could recall, the Central Bank of Nigeria (CBN) stopped Nigerian banks from international transactions using naira cards and imposed a $20 monthly limit on international transactions with dollar cards.”


“Customers can now use their Naira cards on Amazon and other related sites and platforms for International spending.