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International Trade vocabulary · Payment Methods and Letters of Credit

Advance payment

Meaning in international trade, with examples

nounCore term

In international trade, advance payment means: Money the buyer pays before the goods are produced or shipped, either the full amount or part of it as a deposit.

In Turkish: peşin ödeme, avans, ön ödeme

How it is used

Also called cash in advance or prepayment. It is the safest method for the exporter and the riskiest for the importer. Often split: 'a 30% advance payment with the order'. Usually sent by bank transfer (T/T).

Example sentences

  1. Production will start as soon as we receive the advance payment.

  2. For first orders we ask for a 50 percent advance payment.

Common collocations

  • receive an advance payment
  • advance payment guarantee
  • 30% advance payment
  • pay in advance
  • payment termsThe agreed conditions for paying for goods: how much is paid, when, by what method and through which bank or document.
  • telegraphic transferAn electronic transfer of money from one bank to another, usually through the SWIFT network; in trade it is the normal way to send advance or open-account payments.
  • proforma invoiceA preliminary invoice sent before shipment that shows what the final invoice will contain, so the buyer can arrange payment, an import permit or a letter of credit.
  • open accountA payment method in which the seller ships the goods and sends the documents directly to the buyer, who pays later on an agreed date.

More terms: Payment Methods and Letters of Credit

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