An Advance Payment Guarantee binds the supplier to use the advance payment for the purpose stated in the contract between the buyer/employer and the supplier. An advance payment provides the supplier with funds to purchase equipment or components, and/or to make other preparations. In general, the advance payment guarantee should contain a reduction clause that automatically reduces the amount owing in proportion to the value of the (partial) delivery. It only becomes effective once the advance payment has been received and is only issued in connection with Performance Guarantees.