Define: Advance Receipts
Advance Receipts refers to a contract clause defining all money received by or on behalf of a seller before a stated Completion Date, where that money relates to goods or services still to be delivered afterward. It clarifies which pre-completion payments must be tracked, allocated, or accounted for separately once completion occurs, ensuring clean handover of financial obligations between parties.
Legal accuracy standard set & glossary spot-checked by Imad Mohammed Nazar , Skadden-trained M&A lawyer, Legal Engineer at GenieAI
What Advance Receipts Means in a Contract
Advance Receipts is a defined term used to capture funds that arrive in a seller's hands before a transaction, project, or agreement formally completes, but which are tied to obligations that will only be fulfilled after that completion point. The concept exists to draw a clean financial line between what belongs to the pre-completion period and what belongs to the post-completion period, particularly when a business is being sold, restructured, or transferred and ongoing customer contracts span the transition date.
Without such a clause, ambiguity can arise over who is entitled to keep money that was paid early for future performance. A customer may have paid a deposit or full price for goods that will only ship after the Completion Date, and the definition determines whether that cash stays with the seller, gets handed to the buyer, or is held in a separate account pending performance. This is especially relevant in a Relevant Circumstances
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