Progress Payment refers to payments required by an equipment vendor or manufacturer prior to delivery of equipment to be leased. The progress payments lessen the outlay necessary for the vendor to purchase the equipment or the manufacturer to build the equipment and it adds an economic penalty if an order is cancelled mid-stream. Which term describes these payments?

Progress Payment refers to payments required by an equipment vendor or manufacturer prior to delivery of equipment to be leased. The progress payments lessen the outlay necessary for the vendor to purchase the equipment or the manufacturer to build the equipment and it adds an economic penalty if an order is cancelled mid-stream. Which term describes these payments?

• A. Progress Payment
• B. TRAC lease
• C. Sales-Type Lease
• D. Cross Border Financing

Answer: (A)

Progress payments are payments made to the equipment vendor or manufacturer before delivery to fund production or procurement of the gear. These upfront funds reduce the vendor’s or manufacturer’s outlay and help ensure the order proceeds, often carrying a penalty if the order is canceled mid‑stream to deter churn after work has begun. This description matches the term being described. It isn’t about a TRAC lease, which relates to end‑of‑term residual accounting; nor about a Sales-Type Lease, which is a lease classification for revenue recognition; nor about Cross Border Financing, which involves financing across national borders. So the term that describes these pre-delivery payments is progress payments.

Progress payments are payments made to the equipment vendor or manufacturer before delivery to fund production or procurement of the gear. These upfront funds reduce the vendor’s or manufacturer’s outlay and help ensure the order proceeds, often carrying a penalty if the order is canceled mid‑stream to deter churn after work has begun. This description matches the term being described. It isn’t about a TRAC lease, which relates to end‑of‑term residual accounting; nor about a Sales-Type Lease, which is a lease classification for revenue recognition; nor about Cross Border Financing, which involves financing across national borders. So the term that describes these pre-delivery payments is progress payments.