Prepaying? Why?

Why would someone pay amounts up front? Surely voluntary you wouldn’t give away money before the date of payment has really arrived. Or is it so? Truth of the matter is that prepaying is a normal course of business for some types of expenses and done more often enough. 

In essence prepaying is usually used for payments made for longer periods – annual charges for an example. Prepayments can also be made for partial payments for events, marketing purposes etc. There are those, which are regular, and more common – professional charges, subscriptions, rents paid up front, payments made for expenses relating to future periods more or less. And then there are more rare ones, which don’t happen as often – one off payments relating to future periods. It’s essential to carefully read all invoices and understand the period the expense really relates to. The key question is “For which period is this expense being made for?”

As a side note, another reason for prepaying some of those expenses is simple actually – you’ve made your payment and you’re entitled for the service. In other words, you’ve made your payment and don’t have to save up for it anymore.