Advance Payment


Advance Payment
Any type of payment that is made ahead of its normal schedule, such as paying for a good or service before you actually receive the good or service. Advance payments are sometimes required by sellers as protection against non-payment.

Some everyday examples of advance payments are prepaid cellphones, or simply prepaying your rent or utilities as many people do now. In the corporate world, companies often have to make advance payments to suppliers when their orders are large. Suppliers may not have enough capital to buy the materials needed to produce a large order, so they use part of the advance payment to pay for the product they will be creating. If a corporation is required to make an advance payment, it is recorded as a prepaid expense on the balance sheet under the accrual accounting method.


Investment dictionary. . 2012.

Look at other dictionaries:

  • advance payment — ➔ payment …   Financial and business terms

  • Advance payment — An advance payment, or simply an advance, is the part of a contractually due sum that is paid in advance, while the balance will only follow after receipt on the counterpart in goods or services.ee also*Advance against royalties *Pay or play… …   Wikipedia

  • advance payment — something paid partially before the total amount is due (i.e. an advance on someone s salary) …   English contemporary dictionary

  • advance payment — See advance …   Ballentine's law dictionary

  • advance payment — Payments made in anticipation of a contingent or fixed future liability or obligation …   Black's law dictionary

  • advance payment — Payments made in anticipation of a contingent or fixed future liability or obligation …   Black's law dictionary

  • advance payment bond — A guarantee that any advance payments made by a customer will be reimbursed if the company cannot fulfil its obligations under the relevant contract. Such guarantees are normally given by the company s bankers, who are indemnified by the company …   Accounting dictionary

  • Advance Payment Guarantee — ⇡ Anzahlungsgarantie …   Lexikon der Economics

  • advance — ad·vance 1 vt ad·vanced, ad·vanc·ing: to supply or provide ahead of time: as a: to give (a gift) by way of or as an advancement b: to supply (as money) beforehand in expectation of repayment or other future adjustment advance 2 n: a provision of… …   Law dictionary

  • Advance corporation tax — (ACT) was the scheme under which companies made an advance payment of corporation tax when they distributed dividend payments to shareholders. This payment was then offset against the company s final corporation tax bill. Certain recipients, such …   Wikipedia