About the Supplier Pre-Payment
Advance payment to suppliers is a common practice in many companies, where a payment is made in advance to a supplier before the goods or services are delivered. This can be done for a variety of reasons, such as ensuring that suppliers have the necessary resources to produce or deliver a product, ensuring competitive prices, or simply establishing a trusted relationship with the supplier.
There are several potential benefits to advance payments to suppliers. Firstly, it can help ensure that the supplier has the necessary financial resources to fulfill the contract, which can be particularly important in cases where the production or delivery of goods or services is complex or time-consuming. Additionally, advance payments can help establish a stronger relationship between the supplier and the company, which can lead to better prices and delivery timelines in the future.
On the other hand, there are risks involved in making advance payments to suppliers. In some cases, suppliers may not fulfill their contractual obligations, which can lead to the loss of the advanced money and delays in the production or delivery of goods or services. Additionally, it may be difficult to recover the money in case of supplier bankruptcy.
The Advanced Advance Control plays a fundamental role in risk mitigation, as it has a mechanism for managing advances from the advance request to the receipt of the supplier’s invoice and deduction of the advanced amount. Its main benefits are:
- Avoiding fraud in the process
- Approval control by user and amount to be advanced
- Configurable approval workflow
- Notification (emails) at process stages
- Automatic matching of the advance (deduction of the advanced amount when the supplier’s invoice receipt is realized)
For more details, please contact us.