What does Payment in Advance Mean? Part 2


Regardless of which payment method you use or offer, it is also important to issue the correct invoice, be it an offer or a pro forma invoice. A program for correct and secure invoice management is suitable for this .

What are the advantages and disadvantages of prepayment for you as a retailer and for the customer?

Advantages of prepayment Disadvantages of prepayment
As a shop operator, prepayment offers you a payment option that does not involve any additional costs. Prepayment is not very popular with customers. This is also due to the long processing time because the transfer takes some time.
You only send the goods after your customer has paid. This represents a certain payment security for you. For your customers, prepayment means that they need a lot of trust in you and have to rely on the fact that they will receive their goods after payment.
Your customer has to make an advance payment and you are not threatened with financial loss. As a retailer, you have financial security. For you as a retailer, the prepayment method is very often associated with abandoning the purchase process by the customer.

If you take a close look at the advantages and disadvantages, then prepayment should only be one option for you as a retailer. If you only provide prepayment as a payment option , you have to expect significantly less sales.

What does the prepayment option cost you as a retailer?

Often the dealers think that there are no additional costs for them when paying in advance. In principle, this is also the case and prepayment is one of the cheapest payment methods . However, you also need staff and time to check incoming payments on a daily basis. You also have to have and store the goods ready for shipping and this also costs you something. You definitely have to take that into account.

What alternative to prepayment is there for you?

To make prepayment as a payment method attractive to your customers, you can offer a discount, for example. This is particularly suitable for new customers. As an alternative to prepayment, the only thing that can be mentioned is the instant transfer . You can also see Sofortüberweisung as a kind of further development of prepayment. To do this, however, the customer needs an account for online banking . With Sofortüberweisung, as a retailer, you will receive an immediate notification in the form of a payment confirmation, in contrast to classic prepayment. So you can send the goods to the customer faster in the interests of customer satisfaction .

What are the risks when it comes to prepayment?

As a retailer, you don’t actually have any risks with prepayment. Only the buyer has that. On the one hand, he has to make an advance payment financially and trust that he will actually get his goods. In recent years in particular, prepayment has got a bad reputation. Far too many providers on the Internet operate a fraudulent business with it and do not send any goods. In addition, in the event of the retailer’s bankruptcy, there is a risk that the advance payment will flow into the bankruptcy estate and the customer will risk a loss of receivables.

How long do you have time for prepayment?

When paying in advance, the buyer must make an advance payment. This means that it is exactly the opposite of buying on account. In the case of prepayment, the buyer has to pay immediately, because the longer he waits to pay, the longer it takes to get his goods.

Are there any legal regulations for prepayment?

In § 320 BGB it is provided that there is a right of retention for both parties in the purchase contract .

  • This paragraph states that a buyer can withhold the purchase price until the goods are delivered, they are free from defects and also correspond to the order.
  • The seller himself has the right to withhold the goods if he has a reasonable assumption that the buyer will not be able to pay for the goods purchased.

However, this paragraph is canceled by the prepayment. Payment is made before the goods are delivered. Even in the already mentioned Paragraph 433 BGB , in which payment is provided step by step, this does not apply to prepayment. The only exceptions here are the statutory prepayment described above.

In a nutshell: Frequently asked questions about prepayment

How does prepayment work?

The functionality of prepayment is quickly explained. Before the dealer sends the ordered goods, the customer must first pay the purchase price.

What does prepayment mean?

Payment in advance is often referred to as advance payment. In advance means that the retailer sets a payment condition for his customer and only implements this when the buyer has met this condition.

What is SEPA prepayment?

Payment in advance is still the classic among payment methods. The SEPA advance payment is a transfer in advance as part of the SEPA procedure.

What is a prepayment transfer?

The prepayment transfer represents an inexpensive and secure payment method for the online retailer . It is also considered data-secure, as the customer does not have to disclose his bank details or pay any fees. A transfer is sufficient.

How long does bank transfer take with prepayment?

When transferring in advance, the bank terms must be observed. It is therefore quite possible that a transfer takes two to three working days. It is faster if the buyer has an account with the same bank as the seller. Here the transfer can sometimes only take a few minutes.


Prepayment is a secure payment option for online retailers for their customers. This method is free of financial risks for them. The risk of prepayment is borne by the customer alone. The payment option in advance should not be the only payment method that is made available. Customers are not particularly enthusiastic about prepayment and therefore very often break off a sales transaction. In order to be on the safe side, especially with new customers, the retailer should at least grant a discount for purchases made in advance.

Payment in Advance 2