Businesses that offer prepayments for their memberships or services are a sign of an impending business failure.
This is caused by over investment in assets through over expansion of the business way above the current level of cash flow can ever support.
Therefore they’re digging into “future revenues” to cover their current costs.
Very similar to someone using their “future salaries” to buy those expansive bags through the use of credit cards.
Eventually, when the “financial hole” is BIG enough, they bury themselves.
There are many cases of prepayment schemes in other industries as well like the travel, spas, property, and beauty. Most of them had gone bust while those who still remain in business are still struggling financially searching for their next victims.
However, on the other end, consumers don’t think anymore. And this is how they can fall into prepayment schemes so easily.
To the consumers, they “think” they got a good deal without realising that most businesses that ask for prepayments do not last the duration of their prepayment period.
To me, prepayment is a “no choice” business decision to help the business tide over any financial crisis temporarily. However as consumers we must decide if we want to participate in such a prepayment scheme and not just focus on getting a good deal or being greedy.
Remember the fundamental law: Greed leads to Poverty. Period.