Risk that an equipment supplier or contractor fails to deliver on time, to spec, or at all after receiving advance payment.
Audience: Buyer · EPC · Lender
When this guide applies
Any RFQ over USD $150,000 with milestone payments, or where an advance payment is required before shipment.
Add to RFQ draft
Auto-fill mitigation & clause text into your RFQ
Select the risks you want covered. We'll pre-populate the RFQ description with the mitigations and paste-ready contract clauses — you can edit anything before submitting.
Mitigations + clauses will be inserted into the RFQ draft on the next step.
Interactive risk checklist
Tick the mitigations already in your plan
Coverage is severity-weighted, so covering a Critical risk moves the score more than a Low one.
Readiness score
0%
Early stage
0 of 9 mitigations · weighted 0/30
Supplier accepts advance payment then delays or disappears
Severity: CriticalLikelihood: Medium
Impact: Cash locked, project stalled, replacement supplier lead time restarts the clock
Mitigations
Cap advance payment at 30% and require an unconditional Advance Payment Guarantee (APG) from an acceptable bank
Structure payments against verifiable milestones (drawings approved, factory acceptance test, shipment, site acceptance)
Verify supplier as legal entity: registration certificate, VAT number, audited accounts for last 2 years, 3 reference sites contactable
RFQ / contract clause
"Advance payment shall not exceed 30% of contract value and shall be covered by an unconditional, on-demand Advance Payment Guarantee from a bank rated minimum BBB (S&P) or equivalent, valid until Site Acceptance."
Require a documented Factory Acceptance Test (FAT) before shipment with buyer or buyer's inspector present or witnessed by third-party inspection agency (SGS / BV / Intertek)
Attach detailed technical specification as contract annex; ambiguity is resolved in buyer's favour
Retain 10% of contract value as retention against Site Acceptance
RFQ / contract clause
"10% retention shall be held until successful Site Acceptance Test and shall be released against a Performance Bond of equivalent value, valid for the full warranty period."
Supplier lacks aftersales capacity in the target country
Severity: HighLikelihood: High
Impact: Long downtime, imported spare parts, no field service
Mitigations
Require a named local service partner with 24/48h response SLA in writing
Include a Recommended Spare Parts List priced at contract for 2 years of operation
Training of buyer's technicians included in scope (min. 5 working days on-site)
RFQ / contract clause
"Supplier shall nominate a local service partner within the buyer's country, with a written 48-hour on-site response SLA for the duration of the warranty period."
