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Payment Terms
Advance Payment
Definition
Full or partial payment received before goods are delivered or services rendered.
Overview
Advance payments provide immediate cash flow and reduce risk of non-payment. They're common for custom orders, international trade, or high-risk situations.
Example
A custom furniture maker requires 100% advance payment for bespoke pieces.
Best Practices
Use for custom work, new clients, or when materials costs are high. Provide clear delivery timelines.
Common Mistakes to Avoid
No refund policy
Missing delivery commitments
Poor communication
Frequently Asked Questions
Is advance payment the same as a deposit?
Similar, but advance payment often refers to 100% upfront, while deposits are partial.