An advance payment guarantee secures a refund of advance payments against default by the supplier or the contractor. It’s an on-demand bond, where the bondsman is bound to pay the amount of money set out in the bond immediately on demand, without having to meet any preconditions in the contract. Thus this is a bond that should be drafted very carefully to set out the circumstances. An Advance payment guarantee expires when the contract is fulfilled and is commonly used in construction projects and industrial supplies.