Explanation:These kinds of payments happen in many different scenarios like real estate deals, where the buyer frequently issues an upfront payment to cover a portion of the whole value of the property and the rest is either paid in separate installments or it is fulfilled through a mortgage debt. On the other hand, in regular business environments, partial payments are also issued to place service orders, while the rest of the payment is delivered after the service is properly completed. This allows the buyer to remain in control of a certain fraction of the money to motivate the service supplier to complete the service as expected in order to receive the last portion. Business takeovers and mergers are also scenarios where partial payments are issued according to a previously agreed schedule. The buying side of the transaction uses this as a security measure in case unforeseen circumstances, not fully disclosed in the agreement, affect the nature of the transaction. Having a remaining sum of money yet to be paid allows the buyer to withhold money as a compensation in case these circumstances are negatively affecting the company being purchased.
In a nutshell:
- Partial payment refers to the payment of an invoice that is less than the full amount due.
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- Partial payment is normally half of the total amount or a percentage of it.