What happens to unused APA at the end of the charter?

Answer

APA is an advance against charter expenses rather than a fixed additional charge. If the actual agreed expenses are less than the amount advanced, the unused balance is normally returned to the charterer after the final accounts have been reconciled.

If actual expenses exceed the APA, the additional amount may be payable by the charterer in accordance with the charter agreement.

The precise procedure is governed by the applicable charter contract.

Analysis

APA should therefore be viewed as a working expense account rather than part of the yacht’s profit or a guaranteed expenditure amount.

The final reconciliation provides the definitive calculation.

Broker’s advice

We explain this before the charter so clients understand that APA is an estimate of operating expenditure. If you spend less, the balance is normally returned; if the charter costs more to operate, the difference may be due.