Advance Renewal
Magazines are known for encouraging you to renew in advance of the expiration date, and sometimes it seems like it’s about six months ahead of time. Advance renewal refers to any type of agreement that has an expiration date, indicating you want to continue a subscription.
In addition to magazines, software licenses, internet domain names or hosting services, apartment and office building leases, or even mining claims could involve advance renewals. Many times incentives are offered if you renew early, such as discounted prices, but the main reason customers and companies agree to renew in advance is to avoid any disruption in services.
What would happen if the license for the software that everyone uses in an international company suddenly expired? It would be chaos, even if the downtime was for only an hour. The vendor benefits by claiming the revenue from the renewal early, and they will have a more reliable cash flow. They also won’t have to spend as much time and money going out to look for new customers.
Related or Semi-related Video
Finance: What is Delivery Vs. Payment?63 Views
Finance a la shmoop what is delivery versus payment? alright this is delivery [Man delivering package to man and woman]
and this is payment and this is what happens when the whole thing fails to go
off without a hitch yeah and yeah some poor dock worker
who's gonna have to clean all that up well when it comes to selling stock
there's typically less bloodshed but it's no less important to make sure that [Stock delivery appears at door]
delivery of the goods in this case maybe it's a hundred shares of get-rich-quick
com happen simultaneously with payment for those goods or at least so that the
payment is trackable with the delivery well delivery versus payment or DVP for
anyone who's in a hurry is from the perspective of the buyer if you're
looking at things from the seller's point of view it's RVP receive versus
payment because you're receiving the dough or the payment got it [Seller and Buyer appear]
but yeah DVP is basically a settlement system it's a way of ensuring that any
transaction involving the sale of a security goes smoothly so that no one
needs to have rocks tied to their ankles no cash no stash and no splash so why do [Person moving with rock attached to ankle]
we have delivery versus payment like why is this even a thing well you could
imagine in the past that people were paying for things that didn't exist like
they thought they were buying 100 shares of whatever.com they paid the broker and
while the shares disappear the broker disappeared everyone disappeared and oh
well money's gone so what happens today is there was typically a lag in what's
basically a mini escrow account where the money sits for a few days t plus 3 [Money appears in a vault and clock ticks]
it used to be t plus 5 being sure that the seller actually had legal title to
the shares that they were selling to you and that your money was in fact good and
not Somalian warlord laundered money or at least easily identifiable Somalian
warlord laundered money that's why there's a lag and that's why delivery
versus payment has kind of two separate steps got it get it good! stay out of the water... [Man kicks other man into water]
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