What are the merits and demerits of customer advance? Explain.

Merits of Customer Advance Interest free: Amount offered as advance is interest free. Hence funds are available without involving financial burden. No tangible security: The seller is not required to deposit any tangible security while seeking advance from the customer. Thus assets remain free of charge. No repayment obligation: Money received as advance is not to be refunded. Hence there are no repayment obligations. Demerits of Customer Advance Limited amount: The amount advanced by the customer is subject to the value of the order. Borrowers' need may be more than the amount of advance. Limited period: The period of customers' advance is only upto the delivery goods. It cannot be reviewed or renewed. Penalty in case of non-delivery of goods: Generally advances are subject to the condition that in case goods are not delivered on time, the order would be cancelled and the advance would have to be refunded along with interest.