GlossaryEN1 min readUpdated: Jun 23, 2026

Advance

An advance is a payment made by a principal before the agreed service has been performed or invoiced.

Quick Answer

Last updated: 23 June 2026Published: 19 June 2025

Source: https://www.businessdictionary.com/definition/advance.html

Category

Incoterms 2020 Simulator: Who bears costs & risk?

Reading time

1 min

Words

135

Mentioned in

–

Definition & Explanation

An advance is a payment made by a principal before the agreed service has been performed or invoiced. In logistics practice, advances arise when capacity must be locked in, customs duties pre-financed, or storage slots secured – typically on high-risk trade lanes or with operators that do not extend open credit terms. Payment may be made in full or in tranches and is offset against the final invoice; if the service is not delivered, the amount must be refunded. In the freight context, an advance often covers specific third-party disbursements such as port charges, duty payments, or freight contributions, which distinguishes it from a contractual deposit structured as partial performance and security. For the principal, the advance carries a default risk that can be mitigated through bank guarantees or the selection of reputable service providers.

Next steps

Matching tools and partners

Calculate customs valueWork out import duties and customs valueOpen Compare IncotermsClarify duties, cost and riskOpen Calculate transport costWork out freight / road costOpen Find a matching partnerFreight forwarders and logistics partners worldwideOpen

Related Terms

⚖️ ICC Incoterms 2020

Incoterms 2020 Simulator: Who bears costs & risk?

Analyze all 11 Incoterms 2020: cost matrix, risk timeline, insurance gap detector and customs responsibility – free, no login required.

Incoterms Simulator →

Logistics knowledge straight to your inbox

Free · No password · Never a paywall. Weekly top news and facts from logistics.

Advance

Next steps

Related Terms

Incoterms 2020 Simulator: Who bears costs & risk?

Logistics knowledge straight to your inbox

Community Questions & Answers