Glossary · Payment terms
Cash in advance (CIA)
Also called Payment in advance, Prepayment
Cash in advance means the customer pays before the work starts or the goods ship, so the supplier carries no credit risk.
Under cash-in-advance terms the customer pays in full before anything is delivered. It is the safest term for a supplier and the least attractive for a buyer, who carries all the risk instead.
Suppliers use it for new customers with no track record, customers with a poor payment history, customers on credit hold, custom work that can’t be resold, and cross-border sales where pursuing a debt would be impractical.
Full prepayment is a hard sell for large projects. A deposit, or progress billing in stages, gets most of the protection while asking less of the customer.
Example
A customer who paid two invoices 90 days late is moved to cash in advance. Their next €2,000 order is invoiced up front and starts once the transfer arrives.