Cheap can be expensive: how much it can cost a company not to have the right guarantee. Business guarantees.
- Eduardo Ramos
- Jun 22
- 4 min read
Every company seeks to optimize costs.
It's normal.
Reducing expenses improves margins and increases profitability.
However, there is an important difference between reducing costs and eliminating protections.
And that's precisely where many companies make mistakes that end up costing much more than they intended to save.
It's common to hear phrases like:
“I don’t think it’s necessary.”
“We’ve never had any problems.”
“Let’s save that expense.”
"The probability of something happening is very low."
Until something happens.
And when it happens, the cost often far exceeds what it would have cost to implement an adequate guarantee from the beginning.
The business reality is simple:
The cost of a warranty is usually predictable.
The cost of a default is rarely that.
Business guarantees. The mistake of measuring only cost and not risk.
When a company evaluates a warranty, it typically considers:
premium
commission
financial cost
budget impact
What he rarely calculates is:
potential cost of non-compliance
loss of opportunities
flow impairment
reputational damage
legal consequences
And that's where the problem arises.
The strongest companies do not make decisions solely based on cost.
They are made based on risk.
Case 1: The tender that was lost by saving too much
Let's imagine a company that participates in an important tender.
The contract represents:
relevant income
growth
new customers
market expansion
But the company decides not to participate because it considers the requested guarantee to be an unnecessary expense.
Result:
misses the opportunity
loses position
loses future income
What seemed like a saving ends up becoming a much greater opportunity cost.
This is where bid bonds come in, the purpose of which is to allow companies to compete for major projects with adequate backing.
Case 2: The contract that ended up costing more than expected
A company obtains a construction or supply contract.
Everything seems positive.
But later the following arise:
delays
operational differences
claims
penalties
Without an adequate guarantee structure, the financial impact can grow rapidly.
Administrative performance bonds exist precisely to support these types of obligations and generate trust between the parties.
The cost of the guarantee is usually much lower than the cost of a contractual dispute.
Case 3: The customer who never paid
This is one of the most common stories.
The company sells.
Bill.
Delivery.
And then the waiting begins.
Payments are delayed.
The promises are increasing.
The explanations are multiplying.
Finally, the overdue portfolio appears.
The problem is not just the amount owed.
Also appearing:
flow pressure
collection costs
loss of liquidity
missed opportunities
How ZRS helps to avoid this scenario
Many companies analyze the product they sell too much and the customer who buys it too little.
That's where tools like ZRS (Zone of Risk Score) can generate enormous value.
ZRS allows:
assess risk before selling
identify warning signs
improve business decisions
reduce the probability of default
It's not about selling less.
It's about selling better.
Case 4: The tax problem that paralyzed the operation
Many companies consider a tax problem to be unlikely.
Until it happens.
A tax credit or a dispute with the tax authority can generate:
financial pressure
uncertainty
operational impact
Tax guarantees allow certain obligations to be secured and, in many cases, help to maintain operational continuity while the corresponding situation is resolved.
When comparing the cost of the warranty against the potential impact of an operational disruption, the difference is usually obvious.
Case 5: The lease that seemed simple
Another common mistake is assuming that all leases are the same.
But when it exists:
default on payment
damage to the property
contractual disputes
the cost can be considerable.
This is where solutions like NOWO help to protect leasing operations in a more efficient and modern way.
The important thing is not just signing a contract.
The important thing is to protect it.
Case 6: When the problem is already legal
Some companies discover too late that a conflict can evolve into legal proceedings.
Depending on the case, needs may arise related to:
pecuniary penalties
repair of the damage
obligations determined by authority
judicial guarantees
Court bonds are often little known until they become necessary.
And when that moment arrives, having the right solution can make a significant difference.
The true cost of not having a warranty
When a company only analyzes the cost of the warranty, it often ignores much larger costs:
Financial costs
affected flow
loss of liquidity
additional financing
Operating costs
wasted time
diverted resources
interruptions
Commercial costs
lost customers
lost contracts
missed opportunities
Reputational costs
loss of trust
deterioration of trade relations
The strongest companies do not seek to cut costs
They seek to eliminate unnecessary risks.
They understand that:
Not every warranty is an expense.
Not all protection comes at a cost.
Some investments reduce future losses.
The most successful organizations often ask themselves:
How much does it cost to protect ourselves?
But also:
What would it cost not to do it?
And that second question is usually the most important.
Many companies believe they are saving money when they eliminate a warranty.
But in reality, they are only transferring risk to their operation.
The cost of a warranty is usually visible.
The cost of non-compliance usually appears when it is already too late.
That's why the strongest companies don't make decisions based solely on price.
They make them considering the potential impact of the risk.
Because in business, as in many other areas, cheap can end up being very expensive.
Is your company protected or is it simply taking risks?
Business guarantees. At We Link , we help companies identify risks and structure protection solutions using:
Administrative bonds
Tax bonds
Court bonds
Credit guarantees
Risk analysis with ZRS
Tenancy protection with NOWO
Our goal is not to sell a guarantee.
It's about helping you protect your company's growth.
Learn more at:
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