Cash In Advance

AAA

DEFINITION of 'Cash In Advance'

When an importer must pay the exporter in cash before a shipment is made. The logic behind the structure of such a transaction is that if an exporter ships a product to an importer and the importer does not pay for the item, the exporter has very little recourse. This term can be used in a variety of businesses, but it is most common in the import/export business.

INVESTOPEDIA EXPLAINS 'Cash In Advance'

Prior to receiving a shipment of a product from an overseas vendor, many importers are required to send cash in advance. By structuring the transaction in this manner, the exporter (or maker of the product) is protected against the possibility of non-payment by the importer.

RELATED TERMS
  1. Current Account Deficit

    A measurement of a country’s trade in which the value of goods ...
  2. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
  3. Current Account

    The difference between a nation’s savings and its investment. ...
  4. Future Dating

    Crediting a bank account to which the funds will be made available ...
  5. Free Alongside - FAS

    A trade term requiring the seller to deliver goods to a named ...
  6. Balance Of Trade - BOT

    The difference between a country's imports and its exports. Balance ...
Related Articles
  1. Commodity Prices And Currency Movements
    Forex Education

    Commodity Prices And Currency Movements

  2. What is a trade deficit and what effect ...
    Credit & Loans

    What is a trade deficit and what effect ...

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. What is Globalization?
    Investing

    What is Globalization?

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center