Get to know the vital terms of Logistics and Supply Chain Management.
Cash in advance simply refers to a situation of payment where the buyer pays the supplier ahead of shipment or delivery of the goods. This means that the seller receives payment before shipping, hence ensuring all their financial interests are covered ahead of leaving with the products.
Advance Payment: The buyer pays before the dispatch of the consignment. Of course, this reduces the risk to the seller in case of non-payment.
Security for Seller: In this case, as a pre-payment is made, the seller cannot be cheated, particularly in international transactions and high-value transactions.
Trust-based transaction: CIA is mainly used when the seller requires minimizing his or her risks, especially while transacting with first-time buyers or markets that cannot be predicted.
Elimination of payment risk: the seller will have no problems that may be caused by a late or missing payment; he will get his money first before delivering the goods.
The seller dispatches goods even sooner after receiving payment and hence a faster process.
Simply put, Cash In Advance, or CIA, is a secure payment in logistics where the money needs to be received before the dispatch of goods, hence it can be said that this kind of transaction is very secure financially.