An Advance Payment Guarantee commits the supplier to using the advance payment for the purpose specified in the buyer/employer contract. An advance payment provides funds to the supplier for the purchase of equipment or components, as well as other preparations.

In general, the advance payment guarantee should include a reduction clause that reduces the amount owed automatically in proportion to the value of the (partial) delivery. It is only issued in connection with Performance Guarantees and becomes effective once the advance payment is received .