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Trade Finance & Payment

Cash in Advance

Also known as: Advance Payment, Prepayment

Cash in advance is the payment method most favorable to the exporter, under which the buyer pays for the goods, in full or in part, before they are shipped, eliminating the seller's risk of non-payment entirely. While attractive to sellers, it imposes the greatest burden and risk on buyers, who must part with their money before receiving or inspecting the goods and who carry the risk that the seller fails to perform. Because it ties up the buyer's working capital and signals distrust, cash in advance is most common for small orders, custom manufacturing, or trade with unproven counterparties in high-risk markets.

The JFS takeLicensed customs broker · Filer 82G

Safest for the seller, worst for the buyer, and common on a first order from a small supplier. Keep the payment evidence: on a low-value or scrutinized entry, proof of what you actually paid is what substantiates the declared value.

Where it matters for compliance

  • Proof of payment corroborates transaction value and is frequently the document CBP asks for.

Related terms

Open AccountOpen account is a sale in which the exporter ships the goods and sends the invoice with payment due at a later agreed date — commonly thirty, sixty, or ninety days after shipment or delivery — extending unsecured credit to the buyer.Letter of CreditA letter of credit is a written undertaking by a bank, issued at the request of a buyer, to pay a seller a defined amount provided the seller presents documents that strictly comply with the terms stated in the credit.

Reviewed by a licensed customs broker. Definitions are general information, not legal or customs advice for a particular shipment. Duty rates, tariff programs and agency requirements change frequently.