How-to
How to invoice deposits and partial payments
How to bill a deposit, progress payments and the final balance — what each invoice should say, how to show amounts already paid, and how sales tax fits in.
Last updated · Invoice Native team
Not every job is paid in one go. You might ask for a deposit before you start, bill in stages for a long project, or receive only part of an invoice from a client who's short on cash. Each of these needs slightly different paperwork.
This guide shows how to word deposit invoices, progress invoices and final invoices so your records stay clean and your client always knows what's left to pay.
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Three situations, three approaches
| Situation | What you send |
|---|---|
| Deposit before work starts | A deposit invoice for the agreed amount |
| Progress billing on a long job | An invoice at each milestone, showing what's billed so far |
| Partial payment of an invoice you already sent | No new invoice — record the payment and show the balance still due |
1. Deposit invoices
A deposit secures the booking and covers your up-front costs. Common amounts are 25% to 50% of the project price.
Your deposit invoice should include:
- a line like "Deposit — 50% of website redesign (Proposal #28)",
- the total project price for reference (in the description or the notes),
- a due date — usually due on receipt or before the start date, and
- whether the deposit is refundable.
When the work is finished, send a final invoice that lists the full project, then shows the deposit already paid and the balance due:
| Description | Amount |
|---|---|
| Website redesign (Proposal #28) | $6,000.00 |
| Total | $6,000.00 |
| Deposit received (INV-1040) | −$3,000.00 |
| Balance due | $3,000.00 |
Referencing the deposit invoice number makes it easy for both sides to reconcile.
2. Progress billing
For long projects — construction, software builds, large creative projects — agree milestones in the contract and invoice at each one. For example:
- 30% at contract signing,
- 40% at the midpoint milestone,
- 30% on completion.
Each progress invoice should say:
- which milestone it covers,
- the contract total,
- the amount billed to date (including this invoice), and
- the amount remaining after this invoice.
This running total prevents the most common progress-billing mistake: billing more (or less) than the contract allows.
3. When a client pays only part of an invoice
If a client pays part of an invoice, don't create a new invoice for the rest. Instead:
- Record the payment against the original invoice, with the date and method.
- Send a statement or reminder that shows the original total, the payment received and the balance due.
- Keep the original due date unless you've agreed a payment plan.
Invoice Native accounts (coming soon) will track this for you: record a payment and the invoice moves to Partially paid, with the balance shown on your dashboard.
Payment plans
If a client asks to pay over time, agree the plan in writing — amounts and dates — and note it on the invoice ("Payment plan: $500 on the 1st of each month, Oct–Dec 2026"). Then record each payment as it arrives.
Sales tax on deposits and partial payments
How sales tax applies to deposits depends on your state and on what you're selling. Many businesses simply charge sales tax on the final invoice for the whole taxable amount; others charge it proportionally on each progress invoice. Whatever you do, be consistent, show tax as a separate line, and check your state's sales tax guide.
Deposits and refunds
Say upfront whether a deposit is refundable, and under what conditions — for example "Non-refundable once design work begins" or "Refundable up to 14 days before the event". If you do refund a deposit, issue a credit or refund record that references the original deposit invoice, rather than deleting it, so your numbering and records stay complete.
Checklist
- ✅ Deposit invoice with the project reference and total price
- ✅ Final invoice showing the full amount, deposits received and balance due
- ✅ Progress invoices with billed-to-date and remaining amounts
- ✅ Partial payments recorded against the original invoice
- ✅ Payment plans agreed in writing and noted on the invoice
Common mistakes with deposits and partial payments
- Not referencing the deposit invoice on the final invoice, so the client isn't sure it was counted.
- Issuing a new invoice for an unpaid balance, which creates duplicate numbers for one sale.
- Changing totals between progress invoices without a change order.
- Forgetting to record partial payments, so reminders ask for the wrong amount.
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Frequently asked questions
Should a deposit get its own invoice?
Yes. A separate deposit invoice gives the client a document to pay against and gives you a clear record. The final invoice then shows the full amount, the deposit already received, and the balance.
What's the difference between a deposit and a partial payment?
A deposit is billed up front, before work starts. A partial payment is when a client pays only part of an invoice you've already sent; you record it against that invoice and the rest stays due.
Do I charge sales tax on a deposit?
It depends on the state and on whether the deposit is for taxable goods or services. Many businesses charge the tax on the final invoice for the whole sale; check your state's rules for deposits and prepayments.
This guide is general information, not tax or legal advice. Rules change and depend on your situation — check with your state's tax agency or a tax professional.