# Customer Advances > Customer Advances means funds collected in advance, for services or goods due to be provided in the future **Term:** Customer Advances **Last updated:** 2026-07-29 ## Definition ## What Customer Advances Means in a Contract Customer Advances refers to money a customer pays before the goods or services it relates to have actually been delivered or performed. Rather than being treated as immediate revenue, these funds represent an obligation owed by the recipient to the paying customer, at least until the underlying work is completed or the goods are shipped. Contracts use the term to make clear that the payment is conditional on future performance, not a final transaction. This concept matters because it shifts risk and timing between the parties. The customer parts with cash early, often to secure capacity, reserve inventory, or fund upfront costs, while the recipient takes on a duty to either deliver as promised or return the money. A well drafted clause spells out exactly what happens in each scenario, removing ambiguity about ownership of the funds while performance is pending. Customer Advances appear across many transaction types, from a