Advance payment

An advance payment, also known as a prepayment, is a financial transaction in which a payer provides funds to a payee before goods or services are delivered. This is typically done to secure a product or service in advance.

The purpose is often to guarantee that a product or service will be provided by a specified date or to secure a spot in a queue for products or services in high demand.

In financial statements, an advance payment is typically recorded as a liability for the payee until the goods or services are delivered.

Overall, advance payments can be a mutually beneficial arrangement, as they provide assurance to both parties in a transaction. However, it’s important for both parties to clearly understand and agree upon the terms and conditions related to the advance payment.

Ready to grow your business?

Clever finance tips and the latest news

delivered to your inbox, every week

Join the 70,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

We work with world class partners to help us support businesses with finance

close
Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop No, stay on this page