A deposit is a payment the client makes before the work is finished, usually before it starts. It protects you if a project is cancelled after you have already committed time or bought materials, and it shows the client is serious.
Invoicing a deposit is simple once you separate two things: what you agreed and what you are billing now.
When a deposit makes sense
Deposits are common when:
- You need to buy materials or pay suppliers before you can start.
- You are reserving time for a client and turning other work away.
- The project is large or long, so waiting until the end would leave you unpaid for weeks.
- You are working with a new client you have no payment history with.
For small, quick jobs with clients you know, a deposit may add more admin than it is worth.
Step 1: Put the deposit on the quote
Agree on the deposit before any work begins. On the quote, state:
- The total price of the job.
- The deposit amount or percentage and when it is due (for example, on acceptance of the quote).
- When the balance is due (for example, on completion or within 14 days of completion).
- Whether the deposit is refundable, and when.
A short line in the quote notes is often enough: "A deposit of [amount] is due on acceptance. The remaining balance is due within 14 days of completion."
Our guide on how to write a quote covers the rest of what to include.
Step 2: Send a deposit invoice
Once the client accepts, send an invoice for the deposit only. Make it obvious what it is for:
- A line item such as "Deposit for [project name], per quote QUO-001".
- The deposit amount as the total due.
- Its own invoice number and a clear due date.
Some businesses send a proforma invoice for the deposit instead and issue the formal invoice once paid. Either can work; pick the one your accountant prefers and use it consistently.
Step 3: Show the deposit on the final invoice
When the work is done, send the final invoice. The clearest layout is:
- List the full work as line items, at the full agreed price.
- Show the deposit already received as an amount paid, referencing the deposit invoice number.
- Show the balance due, which is the total minus the deposit.
That way the client sees the whole job, what they have already paid, and exactly what is left. In the InvoiceCut invoice generator, enter the deposit in the Amount paid field and the PDF shows the amount paid and the balance due under the total.
If you started from a quote in InvoiceCut, you can convert the accepted quote into an invoice so the line items carry over.
A note on tax
If you charge VAT, GST, or sales tax, a deposit can affect when tax is due. In some VAT systems, receiving an advance payment creates a tax obligation for that amount at the time it is received, not when the final invoice is issued. Rules differ by country, so check with your accountant or tax authority how deposits should be invoiced and reported where you operate.
Common mistakes to avoid
- Charging the deposit twice. Always subtract it on the final invoice.
- Vague wording like "advance" with no reference to the quote or project.
- No written terms about refunds or cancellation.
- Starting work before the deposit clears when the whole point was to reduce risk.
Ready to set this up? Start with a quote that states your deposit terms, then send the deposit and final invoices from the invoice generator.