Definition
A trade arrangement in which the buyer pays the seller in full or in part before the goods are shipped. It eliminates payment risk for the seller but exposes the buyer to the risk of non-delivery, so it is often combined with an advance-payment bank guarantee. It is the opposite of open-account terms in the balance of risk.
Frequently asked questions
What is Advance Payment?
A trade arrangement in which the buyer pays the seller in full or in part before the goods are shipped. It eliminates payment risk for the seller but exposes the buyer to the risk of non-delivery, so it is often combined with an advance-payment bank guarantee. It is the opposite of open-account terms in the balance of risk.
Which glossary terms are related to Advance Payment?
Advance Payment is a procurement term in the South African import/export industry. Related terms in the same area include Bank Guarantee, CSD (Central Supplier Database), Designated Sectors, Documentary Collection, Forex Hedging — each has its own plain-English definition in the TradeCaravan glossary.