What is APA and how does it work?

Source draft 1

Answer

APA stands for Advance Provisioning Allowance. It is an advance payment used to cover variable charter expenses incurred during the charter.

These expenses can include fuel, food and beverages, marina fees, port charges and other costs incurred on behalf of the charterer, depending on the charter agreement.

The APA is generally paid before or at the beginning of the charter. The captain or crew then use it to meet authorised expenses and maintain records of expenditure. At the end of the charter, the accounts are reconciled and the balance is either returned or an additional amount may be requested if the expenditure exceeds the advance.

Options / distinctions

APA is not normally an additional yacht fee or commission. –

It is an advance against variable expenses. –

The percentage or amount can vary. –

Actual expenditure depends heavily on the itinerary and guest preferences. –

The charterer should receive an accounting of expenditure.

Analysis

APA can make the apparent difference between two charter prices less significant than it first appears. A heavily cruising itinerary, extensive fuel use, premium provisioning or expensive marina destinations can materially affect expenditure.

Broker Comment

We normally help clients estimate an appropriate APA before the charter so there are fewer surprises. The important point is to understand that APA is generally money being spent on your behalf, rather than simply an extra charge retained by the yacht.

Source draft 2

Answer

APA stands for an operating advance, with the actual expenditure accounted for during the charter. If expenditure is greater than the amount advanced, an additional payment may be required; variable expenses. The amount required can vary significantly depending on cruising distance, fuel consumption, Advance Provisioning Allowance. It is an advance payment used to cover many of the variable operating expenses incurred during a yacht charter.

Depending on the charter agreement, these can include fuel, food and beverages, marina and port fees, cruising expenses and other agreed costs.

The APA is not normally an additional charge retained by the yacht as profit. It is an operating advance, with the actual expenditure accounted for during the charter. If expenditure is greater than the amount advanced, an additional payment may be required; if less is spent, the remaining balance is generally returned or reconciled according to the charter terms.

Analysis

APA is important because it separates the fixed charter fee from variable expenses. The amount required can vary significantly depending on cruising distance, fuel consumption, itinerary, guest preferences and destination.

Broker Comment

We normally help clients understand the likely APA requirement before they commit to a yacht. The important question is not simply substantial cruising, premium provisioning, multiple marina stays or extensive fuel use may require considerably prefer to estimate APA from the proposed itinerary and how you want to use the yacht. If you tell us whether you want to cruise extensively, spend time at anchor, dine primarily onboard or ashore, and what level of provisioning you less is spent than was advanced, the remaining balance is normally returned to the charterer or otherwise accounted for in accordance with the charter agreement. If more is spent, captain will normally keep records of expenditure, and your broker can help explain the reconciliation process. If controlling expenditure is important to you, tell us at the beginning so the charter charter expenses exceed the APA provided, the charterer will generally be required to provide additional funds. A charterer requesting substantial changes during the week should understand that additional expenditure may spending preferences before the charter begins. A client who wants to cruise extensively should not budget on the assumption that the “What is the APA?” but “What is likely to be spent for *this particular charter*?