What is an advance?

The payment or collection of an operation in advance of the period or moment of delivery of the provision of a service or the delivery of certain merchandise previously agreed, is known as an advance. An advance, then, supposes a prior payment before carrying out a main operation (either the provision of the service or the supply of certain merchandise).

Let's imagine that they require € 2 to make a web page, but to be able to do it and cover the costs involved in paying for certain services such as hosting and the server we have to pay € 500 in advance. This advance payment is an advance and, together with the difference in the price for the other work, we will have the cost of the total service of the creation of the website.

That is, we will have to pay € 1 at the time indicated in order to complete the main operation of the the service that they have lent us. Together with the € 500 of the advance, we will have the total amount that it costs us.

Types of advances

The types of advances are grouped in two dimensions: according to the amount paid and according to who makes the advance.

According to amount paid

  • Total advance: the amount that is anticipated is the total of the operation to be carried out. In the case of the previous example, the amount will be € 2000 in advance.
  • Partial advance: it is the amount that will be paid for the entire main operation and that can be divided into different advance payments (normally it is one or two, at most). It is the example that we have given previously.

Depending on who is making the advance

  • The clients. It is carried out when the products that a company sells are bought in advance by the clients, before the product (or the service) is delivered to said client. The client will understand this advance as "Advance to suppliers".
  • Providers. It is the opposite case to the previous one, since it is the company that buys something from a supplier in advance, paying in advance. The provider will understand this advance as "Customer Advance".

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