Definition
Cash in advance (CIA) is a payment term requiring the buyer to pay the full amount before the seller ships goods or starts work. It is the safest term for the seller and the riskiest for the buyer. CIA is common for custom orders, new or international customers, and buyers with poor credit.
Also called: CIA, Payment in advance, Prepayment, CWO
Cash in advance in practice
The seller sends a proforma invoice or a regular invoice marked "payment required before delivery". Once payment clears, the seller fulfills the order and issues a receipt or a final invoice showing the amount as paid.
In international trade, cash in advance removes the risk of non-payment across borders, but buyers often push back because they carry all the risk. A letter of credit or a partial deposit is a common compromise.
A related term, cash with order (CWO), means payment is sent together with the order itself.
Example
A custom sign maker requires cash in advance for a $2,200 neon sign. The client pays the proforma invoice, the maker starts production, and the final invoice shows a $0 balance due.
Frequently Asked Questions
Is cash in advance the same as a deposit?
No. A deposit is part of the price paid upfront, with the rest due later. Cash in advance means the full price is paid before delivery.
Should I ask new clients for cash in advance?
For custom, non-returnable, or high-risk work it is reasonable. For ongoing service clients, a deposit followed by standard terms is usually easier to agree.
Related terms
- Deposit A deposit is a partial payment made before work begins or goods are delivered, typically 25 to 50 percent of the total.
- Proforma invoice A proforma invoice is a preliminary bill sent before goods or services are delivered that shows the expected items, prices, and terms.
- Cash on delivery Cash on delivery (COD) is a payment term where the buyer pays at the moment goods or services are delivered, rather than receiving an invoice to pay later.
- Letter of credit A letter of credit is a commitment by the buyer's bank to pay the seller a set amount, provided the seller presents documents that exactly match the terms, such as a commercial invoice, bill of lading, and packing list.
- Payment terms Payment terms are the conditions on an invoice that state when and how the client must pay.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.