# Advance Payment

*Last updated: 2026-06-23*

> Exporters demand advance payment when dealing with unknown buyers or when credit risk in the destination market cannot be adequately assessed.

Exporters demand advance payment when dealing with unknown buyers or when credit risk in the destination market cannot be adequately assessed. The buyer transfers the full or partial invoice amount before goods are dispatched or services rendered—making it the most secure payment term for the seller, with virtually no risk of non-payment. For the buyer, the exposure is maximum: funds leave the account before any goods are received, and the entire performance risk rests with the seller. In trade negotiations, advance payment is commonly exchanged for a price concession or a faster delivery commitment. It differs fundamentally from a letter of credit (L/C), which introduces a bank guarantee protecting both parties and represents a middle ground between full prepayment and open account trading.

**Source:** [https://www.investopedia.com/terms/a/advance-payment.asp](https://www.investopedia.com/terms/a/advance-payment.asp)

## Quick Facts

| Property | Value |
|---|---|
| Term | Advance Payment |
| Language | EN |
| Word count | 123 |
| Last updated | 2026-06-23 |
| Source | https://www.investopedia.com/terms/a/advance-payment.asp |

## Related Pages

* [South Sudan](https://www.freight-academy.com/en/information/land/ss)

---

*Logistics Glossary — Freight Academy: [https://www.freight-academy.com/en/glossary/advance-payment](https://www.freight-academy.com/en/glossary/advance-payment)*

*Markdown mirror: [https://www.freight-academy.com/api/md/glossary/en/advance-payment](https://www.freight-academy.com/api/md/glossary/en/advance-payment)*

*JSON summary: [https://www.freight-academy.com/api/v1/glossary/advance-payment/llm-summary?lang=en](https://www.freight-academy.com/api/v1/glossary/advance-payment/llm-summary?lang=en)*