What Are Some Different Types of Payment Terms?

erhui1979/Digital Vision Vectors/Getty Images

Different types of payment terms include cash in advance, deferred payment and cash on delivery, according to BusinessDictionary.com. These are conditions that allow the buyer to make payments on a specified date.

Investopedia.com notes that cash in advance is money that is paid before a product is delivered. This payment term is common in the exporting business, especially with international exports. Cash in advance terms protect the exporter if the importer doesn’t pay for the items.

Cash on delivery occurs when payment is made when the product arrives, according to Investopedia.com. The item is shipped back to the seller if payment is not made. Shipping companies use cash on delivery, and it protects the buyer from purchasing fraudulent items.

BusinessDictionary.com notes that deferred payments are payment obligations that are delayed until the buyer can begin the payment plan. Deferred payments may be 30 days or longer, depending on the provisions of the agreement.