During a meeting organized by Asharqia Chamber remotely
Al-Zaki: The Bank facilities enables contractors to use them on several projects
Wael Al-Zaki, Director of Corporate Relations at Al-Jazira Bank, stressed the importance for contractors to have banking facilities so that they can use them on several projects because their absence causes contractors to submit new papers to obtain credit facilities for their new projects, and that the contractor is also familiar with all the details and requirements Banking so that no missteps occur in the financing, preferring that new contractors or those who are at the beginning of their business enter into a banking relationship until after a year or two and that the relationship be gradual as it is a binomial relationship.
This came during the meeting, which was organized by Asharqia Chamber represented by the Contracting Committee, on Monday, May 18, 2020, and moderated by a member of the Contracting Committee in the Chamber, Abdulaziz Al-Babtain, and it was titled (Successful Management of Banking Facilities for the Contracting Sector).
Al-Zaki said that the relationship between the contractor and the bank depends on the efficiency of the financial management in the contracting companies, which have long had the necessary efficiency and are familiar with banking products, terms, conditions, and details, and have provided more time and effort in completing access to bank facilities for their companies ’projects, Pointing out that the banks are ultimately a profitable financing facility and that their approval of financing or not depends primarily on the contractor’s readiness to submit the complete project papers, which include some documents related to government agencies so that the bank can be assured of the extent of the client’s commitment to governmental requirements such as zakat and localization ratio.
Al-Zaki classified banking products related to the contracting sector into cash and non-cash products. The first includes financing bills, which is a safe cash product related to project financing, as well as financing credits and supplier bills. As for non-cash, it is divided between guarantees that usually relate to the owner of the project and credits Which expresses the relationship between the contractor and the supplier, and it varies from one contractor to another and according to the strength of its relationship with suppliers, indicating four types of guarantees such as the initial guarantee, which represents 1% of the project value, a guarantee of good implementation and a down payment guarantee, and finally a guarantee final payment.
Al-Zaki stressed the importance of the cash flow reports being detailed and comprehensive for all aspects of the project, and for the contractor to be in constant contact with the bank to familiarize the relationship manager with all developments, providing more opportunities for treatments in the event of default, and that contracting companies also have several relationships from more than A bank, which provides options and negotiating opportunities for contractors with banks.
Source: Asharqia Chamber