A preorder is where a customer pays a deposit for a product that is due to be dispatched at some stage in the future. When the dispatch date comes around, the physical product will be dispatched via a processor which is kicked off by someone, this places the 'Balance' order and deducts the deposit from the preorder order.
If a customer's payment fails initially when the dispatch process comes around, then they will be retried 1 day and then again 7 days after that. After this point the order will no longer be automatically processed and it will need manual placement.
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