Advance Payment is a trade system where the buyer places funds at the disposal of the seller before shipment of the goods/services are done.

Features

• Payment is made before goods are delivered to the buyer
• This method of payment is risky
• Banks are involved only in the transfer of funds
• Less expensive as compared with Letters of credit

Benefits

• Quick and secure means to transfer funds abroad
• Customers have access to foreign currency at very competitive rates
• Encourages the seller into a long-term trade relationship