Advanced Payments

Advanced payments are funds paid to a service provider or seller before the actual goods or services are delivered. This practice helps secure reservations, commitments, or cover initial costs. For example, paying a deposit for a hotel stay or upfront for a project ensures the provider that the buyer is serious and helps manage cash flow. These payments are recorded as assets in accounting until the transaction is completed or the service is received, at which point they are recognized as revenue or adjusted based on the final settlement.