The term commercial escrow can cover a wide variety of transactions, and Walker Insurance & Finance Services have a team dedicated to providing payment gateway solutions for most of them.
In essence, of course, any transaction between two businesses who are not used to working together and who seek a neutral third party to help ensure there are no financial issues, could be regarded as a commercial escrow.
A common form of commercial escrow may be where company A has won a contract, and company B who awarded the contract is now expected to make a large first stage payment up front. That payment may be placed in a commercial escrow until the stage is completed, and the conditions are regarded as having been met, and so on.
Until such stage as the terms have all been completed, the money is not released by the escrow company, which could take some time and may require multiple disbursements.
There are any number of commercial escrows that may fall under the umbrella term of commercial escrow and which may include:
Escrows can help to mitigate risk for many transactions that are part of mergers and acquisitions on behalf of both buyer and seller.
Holdback escrows are commonly used where an agreed percentage of the agreed purchase price is retained within an escrow.
Escrows may be tailored to cover most reasonable eventualities.