Down Payment Invoice 1

Meaning of Down Payment Invoice Part 1

In your business as a self-employed or freelancer, the issue of down payment invoices is also part of your everyday life. How often you are confronted with this depends entirely on the type and needs of your company. There are a number of other types of invoices in addition to the normal invoice, and the down payment invoice is one of those types. As with all other invoices, certain mandatory components also apply to the down payment invoice, which you must observe. For example, the mandatory details of the down payment invoice do not differ from those of the normal invoice. You also have to pay sales tax on the down payment invoice note. You will find out what else you need to know and what you need to consider if you continue reading this post.

What does down payment invoice mean?

According to the definition, the down payment invoice is an invoice that the biller creates for a service to be provided in the future . This means that there is still no service provided.

Good to know:

The down payment invoice is also called an advance payment invoice . As a rule, it is primarily provided when carrying out larger projects because it plays an important role here in the context of pre-financing . A down payment invoice is very often used in construction projects and, on closer inspection, is more than a loan or credit. In this context, it forms a specific sequence with other invoices.

This order is as follows:

  • Down payment invoice
  • Partial bill
  • Final invoice

The difference between the invoices mentioned is always the type and quantity of the services provided , for which the service recipient receives one of these invoices. If a project has ended and the recipient of the service has paid his down payment invoice, this will be offset against the final invoice.

When do I have to write a down payment invoice?

If you, as an entrepreneur , want to receive money from your customer before delivery or a service , you have to create a down payment invoice. A down payment invoice is only required if your customer pays a down payment. However, there are certain points that you have to consider when writing a down payment invoice as well as with an advance invoice.

  • The deposit invoice must clearly than this are marked .
  • The down payment invoice must contain an indication of when the expected service date will be. If this has not been determined, a note must be made that this has not yet been agreed, for example.
  • For the required down payment, a description of the service must be made on the down payment invoice .

Important:

As a rule, a final invoice is always sent to a down payment invoice.

Difference between a partial invoice and a down payment invoice

In addition to the down payment invoice, the partial invoice and the above-mentioned final invoice, the term advance invoice is often used in this context . But what exactly is the difference between an advance invoice and a down payment invoice?

  • Down payment invoice: A down payment invoice is paid before a service has been provided.
  • Advance invoice: The payment of an advance invoice takes place after certain partial services have been provided. It is also a conventional invoice, but only represents part of the total invoice.

Example of a down payment invoice

According to SPORTINGOLOGY.COM, the down payment invoice is mainly used for larger projects. It gives you as a service provider a certain security and serves as a kind of pre-financing for the service to be provided. You can see and understand what this means in concrete terms by looking at an example of a down payment invoice.

You are to install the new IT infrastructure for a large real estate company at its headquarters. You set a fixed price of 25,000 euros plus VAT for this work. When the service contract is concluded, a down payment of 10 percent of the gross amount of the entire order is due between you and your customer. After half of the service has been performed, a further partial payment in the amount of 50% of the agreed gross invoice amount is due. After the service has been fully performed and the customer has accepted it, you will submit a final invoice. This results in the following invoices:

  • Invoice with down payment: 2,500 euros plus sales tax
  • Partial invoice: 12,500 euros plus sales tax
  • Final invoice: 10,000 euros plus sales tax

Down Payment Invoice 1