Jasz
VIP Contributor
Advance Payment Insurance is a payment that the company is required to transfer to one of its suppliers upon ordering a product from the supplier, as part of the transaction’s payment terms, even though the product purchased will be delivered at a later date (weeks or even months later). This insurance covers both the buyer and seller in case of default by either party.
Advance Payment Insurance is typically used when there is no cash flow between parties or when only one party has access to funds. The buyer can use this insurance to ensure that the payment is made on time and without any disputes.
For example, if a buyer wants to purchase a car from a supplier but does not have enough money in his/her account at that time, he/she can use advance payment insurance with that supplier. The buyer can then make an upfront payment of $10,000 and payback $7,000 after delivery of the car.
Advance Payment Insurance is typically used when there is no cash flow between parties or when only one party has access to funds. The buyer can use this insurance to ensure that the payment is made on time and without any disputes.
For example, if a buyer wants to purchase a car from a supplier but does not have enough money in his/her account at that time, he/she can use advance payment insurance with that supplier. The buyer can then make an upfront payment of $10,000 and payback $7,000 after delivery of the car.
