Separate guarantee amounts, fees and locked cash
Korea-based, 2026: this calculator covers one Korean public goods or services contract.
Amounts remain in KRW and the national and local procurement rules were checked on October 8, 2026.
It does not apply foreign procurement rules or decide eligibility for issuance, waivers or advance payment.
Public suppliers may need different security documents when entering a tender, signing the contract and receiving an advance.
A business entering public procurement for the first time can mistake the entire security amount for an insurance expense, or assume that obtaining a certificate requires no cash.
The face amount, issuance premium and cash collateral affect the budget in different ways.
Use the notice-confirmed percentages and periods, actual issuer quotes, collateral requirements and release dates to compare two offers.
The calculator separates expenses from cash temporarily unavailable for operations and shows how much funding is needed before the advance arrives.
Take the comparison to the contracting authority and issuers to confirm that both offers cover the same obligations.
Security face amount
The amount specified by the notice percentage or advance interest addition.
It is separate from the premium and is not added to expenses.
Issuance cost
The actual premium plus separate issuance charges.
The model treats these as expenses without assuming that they will be refunded.
Locked cash
A cash security deposit or collateral required for certificate issuance.
It remains unavailable until the entered release date and is reported separately from cost.
Ordinary 2026 rates and the contracting boundary
Article 37 of both the national and local contract enforcement decrees ordinarily requires bid security of at least 5% of the bid amount.
National Article 50(1) and local Article 51(5) ordinarily require at least 10% of the contract amount for goods and services.
The versions effective June 3, 2026 were checked directly through the National Law Information OPEN API on October 8, 2026.
These percentages require notice-specific confirmation
The decrees provide for temporary 2.5% bid and 5% contract references when a notice designating an applicable period is in effect.
Waivers, extra security and individual tender conditions can also change what is required.
The calculator does not infer eligibility or a currently effective temporary period from the date alone.
Edit the percentages using the tender and authority response; values below the ordinary references produce a reminder to verify the exception.
Works performance guarantees, low-price tenders, the total amount of a continuing contract, unit-price quantities and extra security require separate review.
Public enterprises and other contracting regimes may use different rules, so choose the individual-confirmation mode for those contracts.
Selecting a national or local regime does not approve certificate issuance, a waiver or the payment of an advance.
Advance security adds interest over the security period
An advance is money for performing the contract; it is not a premium discount or business profit.
Securing repayment requires attention to both the advance principal and interest over the security period.
If the interest rate is blank, the advance face amount and affected offer totals are withheld rather than calculated at an assumed zero rate.
National contracts
Article 35(2)-(4) of the Government Tender and Contract Execution Standards governs this reference.
Security adds the agreed-interest equivalent to the advance and starts before the advance payment date.
The reference tail is at least 60 days after performance ends, or at least 30 days when the performance period is 60 days or less.
The verified standard is Government Contract Standard No. 172, effective August 25, 2026.
Local-government contracts
Chapter 1, Section 2, item 4 of the Local Government Tender and Contract Execution Standards covers securing the advance.
The certificate interest rate takes priority; when no rate is agreed, confirm the relevant Bank of Korea average lending rate with the issuer and authority.
Security starts before payment and continues at least 60 days after performance ends.
The national 30-day exception is not applied to local contracts.
The verified standard is Ministry of the Interior and Safety Standard No. 372, effective July 1, 2026.
The planning calculation uses inclusive calendar dates, ACT/365 or ACT/366, simple interest and rounding up to whole KRW.
These choices do not establish the calculation method of every certificate: minimum premiums, daily conventions and rounding may differ.
No current bank interest rate is supplied automatically.
Enter the confirmed applicable rate and reconcile the result to the actual security document.
Prepare the documents behind the inputs
Tender, contract and payment plan
- Check the bid and contract amounts, notice date and stage-specific security percentages.
- Confirm performance start and end dates, expected advance amount and receipt date.
- Confirm the advance interest rate and the required period beyond performance completion.
Issuer quotes and collateral terms
- Request total premium quotes for identical security amounts, periods and obligations.
- If using an annual rate, distinguish that confirmed rate from separate issuance charges.
- Obtain written confirmation of cash collateral, its actual release date and any approved waiver.
Available opening cash is liquid cash less the reserve you need to preserve for wages, rent and existing suppliers.
When the reserve exceeds liquid cash, the available amount becomes zero rather than treating essential operating funds as available security funding.
Enter zero if there is no advance.
Enter zero collateral only when the issuer has confirmed that issuance requires no cash collateral.
Formulas for security, premiums and opening funding
- Bid face amount = ceil(bid amount × confirmed bid rate / 100)
- Contract face amount = ceil(contract amount × confirmed contract rate / 100)
- Advance interest addition = ceil(advance × annual interest rate / 100 × inclusive days / day basis)
- Advance face amount = advance principal + advance interest addition
- Annual-rate premium = ceil(face amount × confirmed annual premium rate / 100 × inclusive days / day basis)
- Opening cash required = largest cumulative cash deficit along the dated funding schedule
The total-quote option uses the issuer premium amount directly without applying a daily rate a second time.
If the quote already includes issuance charges, enter zero in the separate-cost field to avoid counting them twice.
The cash-deposit option locks the entire security face amount without adding certificate premiums or certificate collateral.
Cash substitution is not offered for the advance stage; use a certificate or an authority-confirmed waiver.
Peak locked cash is the largest amount simultaneously unavailable between funding and release dates.
Opening cash required also includes fees and advance receipts, so it differs from simply adding all face amounts or all deposits.
Peak simultaneous security amounts include only active certificate and cash stages.
A bid guarantee that has expired is not added to the later contract and advance guarantees.
Use the calculator step by step
- Confirm the contracting regime.
Choose national goods/services, local goods/services or other, then replace the illustrative notice date and monetary values.
- Align security periods.
Check start and expiry dates against actual planned outlays and confirm the advance interest and required tail.
- Enter two comparable offers.
Use a total quote or confirmed annual rate, collateral, release dates and separate costs.
For a waiver, also confirm that the contracting authority accepted it.
- Compare fees with funding needs.
Check whether a lower premium requires more collateral or delays its release enough to create a larger opening funding gap.
- Save and reconfirm the schedule.
Use the TXT comparison or printout when discussing terms, and calculate again after contract amendments or extensions.
Fictional example: lower fees, greater opening cash
Assume a KRW 100 million bid and contract, confirmed 5% and 10% security rates and a KRW 30 million advance.
Bid security runs October 10-19, 2026; contract performance and security run October 20, 2026-January 31, 2027; advance security runs November 1, 2026-April 1, 2027.
The advance arrives November 2, 2026.
For teaching only, assume 4.5% annual interest and ACT/365: neither that rate nor these premium and collateral figures are market averages or real offers.
The bid face amount is KRW 5,000,000 and the contract face amount is KRW 10,000,000.
The advance security period contains 152 days; its interest addition is KRW 562,192 and its face amount is KRW 30,562,192.
Offer A uses certificates with premiums of KRW 50,000, KRW 100,000 and KRW 300,000 and collateral of zero, KRW 2 million and KRW 10 million.
Offer B uses a cash bid deposit and contract/advance certificates with premiums of KRW 100,000 and KRW 250,000 and collateral of KRW 5 million and KRW 15 million.
Separate costs are zero; each deposit is released the day after the corresponding security expires.
Fictional offers A and B: costs, collateral, funding and net cash under identical public-contract conditions| Measure | Offer A (KRW) | Offer B (KRW) |
|---|
| Total issuance cost | 450,000 | 350,000 |
| Peak locked cash | 12,000,000 | 20,000,000 |
| Opening cash required | 12,450,000 | 20,350,000 |
| Gap with KRW 8 million available | 4,450,000 | 12,350,000 |
| Net cash after advance receipt | 17,550,000 | 9,650,000 |
| Net cash after all releases | 29,550,000 | 29,650,000 |
Offer B saves KRW 100,000 in fees but locks an extra KRW 8,000,000 at its peak and needs KRW 7,900,000 more opening cash.
Choosing only by premium can therefore overlook the money needed before the advance is paid.
The peak simultaneous security face amount is KRW 40,562,192 for both offers; equal security does not imply equal cash requirements.
Read cash before and after the advance arrives
If existing collateral is released and a new deposit is funded on the same date, the model makes the release available first.
It then pays premiums and funds new collateral, with the advance arriving afterward.
An expected same-day receipt therefore does not erase the cash deficit that can exist before issuance and collateral funding.
Expiry and cash availability are different dates
Certificate expiry may not cause an immediate collateral refund.
Issuer processing, holidays, authority confirmation or missing documents can delay the day the cash becomes usable.
Move the release date to that actual availability date.
A release entered before expiry needs a separate agreement; the calculator does not authorize that refund.
Timeline net cash excludes opening cash and includes only the advance, issuance costs and security deposits.
It omits supply costs, subcontractor payments, wages, tax, final contract receipts and advance settlement.
Positive cash after every release is not evidence of contract profitability.
Connect this limited schedule to the actual business cash-flow plan.
Three practical situations
Entering public procurement
Check the tender percentage and bid submission or waiver documents before reserving the later contract-stage fees and collateral.
Confirm when a cash bid deposit is actually refunded to see whether bid and contract funding overlap.
Using an advance for supply preparation
Check whether fees and collateral must be funded before the receipt date.
Do not assume the entire advance is immediately available: examine cash remaining after deposits and fees, then prepare the contract-purpose spending plan.
Changing issuers or extending performance
Compare a low-premium offer with an offer requiring less collateral or releasing it sooner, using identical face amounts and periods.
For an extension, reconfirm the advance tail and interest addition and obtain actual endorsement or replacement quotes.
Missing inputs, validation and limits
- Blank premiums, annual rates, collateral or applicable advance interest withhold the affected totals and timeline.
A confirmed zero differs from an unknown amount, so missing information cannot silently understate funding.
- Negative, non-finite or nonnumeric amounts, amounts above KRW 1 trillion, invalid dates and reversed periods stop calculation.
The advance cannot exceed the contract amount and each security period is limited to 3,660 days.
- A waiver requires authority confirmation; payment undertakings and other required documents need separate review.
The reference face amount remains visible but the waived stage is excluded from actual issued security totals.
- The model does not assess credit, approve a guarantee limit, predict issuance, calculate default damages, liquidated damages or recourse, or determine legal liability.
Security face amounts are not legal caps on actual losses or claims.
- The model uses one security start date for both premium and collateral outlays.
Different fee and funding dates, partial releases or interim settlements require additional entries in the actual business cash plan.
Frequently asked questions
Is a KRW 10 million guarantee a KRW 10 million expense?
For a certificate, KRW 10 million is the security face amount rather than the premium.
Actual premiums and issuance costs are expenses; required cash collateral is reported separately as locked cash.
With a cash-deposit method, the full face amount remains deposited until release.
Can I always use 5% for bids and 10% for contracts?
Those are ordinary national/local goods and services references and still require checking the notice.
Temporary periods, waivers, additional security and the contracting regime can change the requirement.
Works, unit-price and continuing contracts need separate review.
Where do I obtain the advance interest rate?
Ask the contracting authority and issuer for the applicable rate and certificate calculation.
The national rule describes the agreed-interest equivalent and average institutional lending rate; the local rule gives priority to the certificate agreement, with the lending-average reference if no rate is agreed.
The calculator does not automatically select a bank rate.
Does the national 30-day tail exception also apply locally?
No.
National Article 35(4) provides the 30-day reference for performance lasting 60 days or less.
The verified local Chapter 1, Section 2, item 4 requires the 60-day tail.
Reconfirm the period after an extension.
Does funding include a deficit on the advance receipt date?
Yes: existing releases occur first, then premiums and new deposits, then advance receipt.
The pre-receipt deficit is included in opening cash required, so a same-day advance cannot erase earlier funding needs.
How do confirmed no-collateral issuance and unknown collateral differ?
Enter zero when the issuer confirms that no cash collateral is required.
Leave the field blank if no answer has been received; the affected offer totals remain pending.
Waivers also need the explicit confirmation checkbox and the result is not an approval.
Is the cheaper premium always the better offer?
Compare the premium with collateral and release terms.
In the fictional example, offer B saves KRW 100,000 but needs KRW 7,900,000 more opening cash.
Check actual cash availability and other essential outlays before choosing.
Is final net cash the profit on the contract?
No.
It only includes the advance and guarantee-related cash and excludes supply costs, wages, tax, final payments and advance settlement.
Peak simultaneous security likewise does not determine maximum default damages or recourse.
Official sources and updates
Sources were checked on October 8, 2026.
Current status, effective dates and article text were verified directly through the official OPEN API, with the local advance-security section checked against the official attachment.
Temporary exceptions, notice-specific requirements and actual issuer premium, collateral and release terms need a fresh check for every contract.
- National Contract Enforcement Decree, Articles 37 and 50 (effective June 3, 2026)
- Local Contract Enforcement Decree, Articles 37, 51(5) and 52 (effective June 3, 2026)
- Government Tender and Contract Execution Standards, Article 35 (effective August 25, 2026)
- Local Government Tender and Contract Execution Standards, Chapter 1, Section 2, item 4 (effective July 1, 2026)
- Public Procurement Service contract-security guide
Compare identical quotes before committing cash
Collect confirmed notice rates, advance interest, actual issuer quotes and usable collateral-release dates.
Compare the fees alongside cash needed before the advance arrives and the operating reserve you need to protect.
Use the TXT or printout to reconcile conditions with the authority and issuer, and refresh it after amendments or extensions.
Return to the cash-budget inputs