An advance payment is a financing system in which the provider transfers part of the non-repayable financial contribution to the beneficiary in advance, without the need to submit invoices or other accounting documents. The beneficiary uses the advance received to pay project expenditure on an ongoing basis and, at set intervals, submits a settlement of the advance payment, demonstrating that the funds were used for eligible expenditure. The maximum amount of the advance and the settlement deadlines are defined in the NFP contract and in the EU funds' financial management system. Advance payments are used mainly by state budgetary and contributory organisations and in specific types of projects, for example educational activities funded from the ESF+. The beneficiary must return any unspent or unsettled advance; using it for ineligible expenditure is considered a breach of financial discipline.
See also: Pre-financing, Financial management system.
