Advance Payment

Advance Payment 

a payment that precedes a transfer of property, the fulfillment of work, or the rendering of services. Unlike a deposit, an advance payment is not a method of ensuring the fulfillment of an obligation and therefore must be reimbursed if the contract stipulating the advance payment is not fulfilled. According to Soviet legislation, an advance payment among citizens is determined by an agreement between the parties. As a general rule, socialist organizations do not have the right to make or receive advance payments, because this would mean that one organization finances another. Such financing was prohibited by law at the time the 1930 credit reform was enacted (Collection of Laws of the USSR, 1932, no. 74, art. 454). USSR legislation allows advance payments only in some isolated cases. For instance, state construction and installation organizations working on a contract basis have the right to ask for advance payments from their clients (kolkhozes, cooperatives, or public organizations); kolkhozes can request them from consumers’ cooperatives according to contracts for the sale of farm output on commission; and enterprises supplying gas, water, and electric power, communications enterprises, civil aviation, and research and development organizations can request them from contracting parties. Before the kolkhozes were directly credited by banks, they could request advance payments from the appropriate purchasing organizations. Finally, organizations rendering paid services to the population can sign contracts for advance payments.

In Soviet labor law, a planned advance payment is a sum of money paid in the case of piecework pay as part of the wage until the work stipulated in the order is completed. The amount of such an advance payment is set forth in the agreement between the administration and the trade union organization at the time the collective agreement is concluded; however, it cannot be smaller than the worker’s official wage rate for the time put in (Collection of Decrees of the USSR, 1957, no. 6, art. 68).

As a rule, making nonplanned advance payments to workers and employees is prohibited. In exceptional cases, an enterprise may make a nonplanned advance payment to an employee as part of his wage in an amount not greater than his monthly wage. The amount of advance payment to an employee for business trip expenses is determined by the administration.

E. G. POLONSKII