Cash In Advance
When an importer must pay the exporter in cash before a shipment is made. The logic behind the structure of such a transaction is that if an exporter ships a product to an importer and the importer does not pay for the item, the exporter has very little recourse. This term can be used in a variety of businesses, but it is most common in the import/export business. Investopedia Says:
Prior to receiving a shipment of a product from an overseas vendor, many importers are required to send cash in advance. By structuring the transaction in this manner, the exporter (or maker of the product) is protected against the possibility of non-payment by the importer. Related Terms:
Balance Of Payments - BOP
Balance Of Trade - BOT
Current Account
Current Account Deficit
Entrepôt
Free Alongside - FAS |