Advance

An advance is a payment made in advance of the performance of any associated service or product delivery. If the advance is made by a customer, it is initially recorded by the recipient as a liability, since no performance has yet been completed. If the advance is made to a supplier, the payer records it as an asset, since no related receipt and consumption has occurred. A payment to an employee prior to the employee working the related hours is also an advance, and is initially recorded by the employer as an asset.