Advance payment

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Payments made to the insured by the insurance company before the settlement date. For example, a claim is scheduled to be settled on June 1, 2008, but the insurance company pays the claimant prior to that date.

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Any type of payment that is made ahead of its normal schedule, such as paying for a good or service before you actually receive the good or service. Advance payments are sometimes required by sellers as protection against non-payment.

Investopedia Says:
Some everyday examples of advance payments are prepaid cellphones, or simply prepaying your rent or utilities as many people do now. In the corporate world, companies often have to make advance payments to suppliers when their orders are large. Suppliers may not have enough capital to buy the materials needed to produce a large order, so they use part of the advance payment to pay for the product they will be creating. If a corporation is required to make an advance payment, it is recorded as a prepaid expense on the balance sheet under the accrual accounting method.

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Learn how a country's current account balance reflects the country's economic health. Understanding The Current Account In The Balance Of Payments
Learn how these accounts are intertwined and what they tell us. Understanding Capital And Financial Accounts In The Balance Of Payments


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An advance payment, or simply an advance, is the part of a contractually due sum that is paid in advance for goods or services, while the balance included in the invoice will only follow the delivery. It is called a prepaid expense in accrual accounting.

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Unearned Revenue (in accounting)
Deferred Charge (finance term)
Retainer (business term)
Advance Funding (insurance term)