Small farmers often need cash before harvest—for seed, cultivation and household expenses—while their crop will only become deliverable later. Traders may likewise need working cash before goods become available.
Salam gives the seller immediate liquidity without an interest-bearing loan. The buyer, in return for paying early and accepting later delivery, may obtain the commodity at a price lower than the spot price expected at delivery.
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Advance-Purchase Sale (سَلَم): Why Future Delivery Is Allowed
Small farmers often need cash before harvest—for seed, cultivation and household expenses—while their crop will only become deliverable later. Traders may likewise need working cash before goods become available.
Salam gives the seller immediate liquidity without an interest-bearing loan. The buyer, in return for paying early and accepting later delivery, may obtain the commodity at a price lower than the spot price expected at delivery.