Have you ever created an invoice for which part must be paid in advance as a deposit or an advance? If so, how did you deal with this partial payment?
It’s not an uncommon approach, for many fields, a deposit or partial payment in advance is required, particularly when it comes to certain services. This can be either due to supplies necessary for conducting the service, as a guarantee for completion of the payment, for example.
Many entrepreneurs might request an advance partial payment for a custom product, or for a service with the remaining balance due after it is completed. However, this payment must also be accounted for on an invoice to provide legal documentation of the sales process.
In this article, we address the best way to manage these types of payments when it comes to invoicing.
What must a down payment invoice include?
It is required that an invoice must be issued for each amount billed - even if it is just for a fraction of the total amount.
For example, let’s say that you agree to a job for which you’ll receive 25% of the total amount before commencing the job, and the rest to be paid out within the standard payment period of 30 days.
Following the above regulations, you would then need to, in fact, create two separate invoices: one for the advance partial payment, and one for the final remaining balance.
However, it is also important to include the deposit in the final invoice, which can be done in your Debitoor invoice template by adding it as an item in the invoice and making it a negative amount. In this way, it will be included in the final invoice but does not factor in to the remaining total due.
What an invoice should include
Invoice templates like those in Debitoor invoicing software, help ensure that you include all the necessary details needed to create a legal, professional invoice, each and every time you bill a customer.
- In general, each invoice you create should include:
- Your company name and contact details
- The name and contact details of your customer
- A unique invoice number following your sequence
- The date of issue
- A description of the product or service
- The amount/unit of the product or service
- VAT number, if applicable
Optionally, you can include a due date (always recommended, as it can help you get paid faster) as well as any notes or terms for your customer.
In this case, for the invoice accompanying an advance partial payment, a note stating that it is a deposit might be useful. Additionally, a note can be added to the second invoice, stating that the deposit was paid in full on such-and-such date, as well as being added in the negative as an item in the invoice.