Advance Renewal Details

Advance renewal is a payment method that involves paying for a service way before its expiration date. Many service providers use this payment option to avoid costly follow-ups with already subscribed users. It also prevents services from being cut off to the customer due to delayed renewal payments. Companies avoid downtime, clients are not caught off-guard at the end of their subscription, and customers have the option to renew their subscription early.

Periodic services use advance renewal often for quarterly, half-yearly, annually, or even after a few days or months subscriptions. Services like internet, cable TV, club memberships, and insurance covers all operate on a periodical basis. The company will typically send the customer a notification weeks before their subscription expires, letting them know when it expires, how they can renew it, and the price.

If a customer ignores the email or fails to pay before the deadline, most services are courteous enough to remind them that their payment is due. This is especially the case if the company cannot process the credit card the customer registered with the company. Most other subscription services will terminate the subscription until the customer pays.

Real-life Example of Advance Renewal

TV services like Netflix, Showtime and Hulu, have adopted the advance renewal payment system to prevent any form of downtime on their customers' end when their subscriptions expire. Amazon Prime is another example of a periodic payment. About a month before the Prime subscription expires, the customer will receive an email notifying them that their subscription is about to end. Unless the customer had a terrible experience with the service or can no longer afford it, they will prepare to renew their subscription or allow automatic renewal to do it for them.

Significance of Advance Renewal

The time between a subscription expiration and its renewal is called downtime. Downtime is a lose-lose situation for both the customer and the company. The company loses money, and the customer loses the service. That's why advance renewal is such an important service. It reduces the chances of downtime and guarantees customers for as long as the subscription lasts.

Advance Renewal vs. Advance Premium

Advance premium is a type of advance renewal, just in the insurance realm. With an advance premium, the insured pays a premium to bind the insurance contract. It also may refer to pre-paid premiums. They are, in essence, renewing their insurance coverage.

Advance Renewal vs. Advance Payment

All advance renewals are advance payments, but not all advance payments are advance renewals. An advance payment refers to a payment you make ahead of time towards a utility bill, rent, etc. An advance renewal only refers to advance payments made that renew a subscription. For example, renewing your Crunchyroll subscription with an advance payment is an advance renewal. Paying your landlord three months of rent in one month is only an advance payment, not an advance renewal.