Deferred payment and its benefits

len Alfred Ajibola - Tue, 16th April, 2019 @ 20:24: PM

Topics in Commerce

Principle of Marketing: Positioning as a Marketing Mix Principle of Marketing: Packaging as a Marketing Mix Elements of Promotion in Marketing Mix Principle of Marketing: Promotion as a Marketing Mix Principle of Marketing: Place as a Marketing Mix Principle of Marketing: Price as a Marketing Mix Principles of Marketing: The 7 Ps of Marketing Mix Factors necessary for Division of Labour Disadvantages of Division of Labour Advantages of Division of Labour Outbound Marketing explained Inbound Marketing explained Production - Types of Production Commerce: Definitions and Scopes of Commerce Differences between Balance of Trade and Balance of Payments Balance of Payment Deficit and Balance of Payment Surplus Disadvantages of Foreign Trade Divisions of Foreign Trade Advantages of Foreign Trade What is Foreign Trade? Types of Foreign Trade

Academic Questions in Commerce

Please check out our Test Your Knowledge page to see all Questions and Answers

The followings are advantages of division of labour EXCEPT _____.

  • A. It promotes the use of machines in production industries
  • B. There is an increase in profit
  • C. It saves time and expenses of training
  • D. It fosters the spirit of division
  • E. It increases the production of quality goods and services in the market
  • F. It increases a country's economic growth

Which of the following statement is incorrect concerning division of labour?

  • A. It is the specialization of works
  • B. It can become monotonous
  • C. It is the specialization of processes
  • D. The nature of a job is not a condition for division of labour
  • E. A person performs only a part of the job
  • F. Division of labour has some of its drawbacks

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What is Deferred Payment?

Have you ever made a payment contract such that you received goods or services without making an immediate payment?

If yes; and suppose you took some significant time before you were able to make the payment for what you initially received; then this delayed payment is known as deferred payment.

Please read on the Methods of Payment through Commercial Banks here.

By definition, deferred payment is a payment made in the future after a buyer receives goods and services.

It is the “buy now, pay later” type of transaction.

According to the seller, the money yet to be received after the supply of goods or services is called accrued revenue or unrealized revenue or accrued assets.

According to the buyer, the money yet to be paid after the delivery of goods or services is called an accrued expense. For instance, a company that owes employees salary is said to have an accrued expense.

Deferred payments are referred to accrued revenue from the perspective of the seller.

From the perspective of the buyer, deferred payment is referred to as accrued expense.

Please read on the Principle of Double Entry here.

Note: A prepayment is a likely reverse of deferred payment in the sense that after the buyer makes payment, he or she only gets to enjoy whatever had been paid for after some significant time had elapse.

Think of a prepayment as "paying in advance".

An example is when a tenant pays in advance to a landlord for an apartment yet to be used.

Please read on the Agencies of Consumer Protection here.

Having a good understanding of deferred payment is important to accountants because they can act as a criteria in valuing an asset on a company’s record.

Please read on the Differences between Accountants and Bookkeepers here.


Advantages of Deferred Payment

Deferred payment will have positive outcomes in a society if properly implemented.

Below are some advantages of deferred payment:

  • Education

A student who is financially unstable may apply for a deferred payment scheme which comes in a variety of forms; for instance, the student may be allowed to conclude his or her education for free and is only permitted to start making payments after such student secures a job.

Deferred payment programs have presented an opportunity to the children of the financially unstable to successfully complete their tertiary education rather than ending up as dropouts.

Please read on the Meanings, Causes, Consequences and Solutions to Illiteracy here.


  • Agriculture

Farmers can receive a non-interest loan to boost their agricultural activities. Some may use this money to buy quality seeds, fertilizer, and agricultural machinery. They are expected to pay back from the profit that had been made.

Please read on Agricultural Tools/Machines and their Uses here.

A country may boost its export of agricultural produce in this way, especially when the necessary conditions (of deferred payment) are put in place.

Please read on how to start a home based fish farming here.



People are given the opportunities to buy landed properties while spreading its payment over a period of time. During, this time, the buyer acquires the property and maximizes it for whatever his or her intentions are.

It is important to know that the buyer may pay some additional interest during a stipulated time duration.

Please read on the Meaning, Scope and Importance of Business Studies here.



For entrepreneurs with a great business vision but lack the capital to implement it, going through the deferred payment route is one of the best alternatives.

We have many financial institutions that are willing to lend out money to their customers over a period of time without a substancial interest rate.

Please read on the various types of Business Structure; their Advantages and Disadvantages here.

Many people have ended up becoming dependent through this very process.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.

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Amazing facts in Commerce

Amazon is an e-commerce website launched in 1995. It did not make any profit for its first seven years.
Amazon's first profit was in 2003. Its founder "Jeff Bezos" is the richest man in the world as at 2018/2019


Commerce can be defined as the exchange of goods and services, usually for money and on a large scale that will require the transportation of such goods and services.

Commerce is very important to the life of any Nation for the following reasons:

  1. Commerce facilitates the exchange of goods and services which everyone can enjoy, regardless their location or whether the goods is produced within or outside their country.
  2. Commerce creates an awareness of the existence of goods and services through advertising.
  3. Commerce offers employment to a very large number of people in a Nation.
  4. Commerce promotes rapid transfer of both oral and written messages through communication.
  5. Commerce determines the standard of living in a Nation. This is because the extent of commercial activities is crucial to wealth of  a nation.
  6. Commerce makes for the protection against risk in day to day business operations.
  7. Through commerce, there is a steady supply of goods in a Nation. This is because commerce ensures that goods produced are stored until needed.

A public company is not owned by an individual. Usually, it is owned by groups or a very large number of people.

The shares of a public company are traded freely on the stock exchange.

Below are some features of a public company

  1. A public company must receive it’s training certificate to commence business.
  2. The minimum membership is two while the maximum membership is limitless.
  3. A public company has a legal status. It can sue and be sued.
  4. A public company files and publishes its annual reports, including its accounts.
  5. The liability of its members is limited.
  6. The shares are easily transferrable through the stock market.
  7. A public company can issue debentures to be secured as its assets.

Please read on the types of business structure here

The four elements of the marketing mix are usually referred to as the 4 “P”. These are:

  1. Product: Anything thing that satisfies a consumer’s need is referred to as a product. Product may come in the form of manufactured goods, raw materials or services.
  2. Price: Price is defined as the exchange value of goods and services supplied. In simple terms, it serves as a mechanism of exchange.
  3. Promotion: It involves all the processes that concerns with how business organizations should inform their customers about its product. If done properly, the demand of product will be increased. Promotions can take the form of advertising, search engine optimization, social media marketing, trade fairs exhibition and so on.
  4. Place: The place as a marketing mix concerns variables such as location and transport facility where the distribution of goods and services take place.

Think of marketing mix as the set of marketing tools that an industry or company uses to drive or accomplish its marketing objectives in the target market