Getting paid

Deposit invoices: how to ask for an advance payment

How much deposit to ask for before work starts, how to invoice it, how to show it on the final invoice, and what to say about refunds.

4 Oct 2026 · 7 min read

A kitchen for £8,000. The customer accepts the quotation, pays a 30% deposit on its own invoice, and the balance is billed when the work is done.

Asking for money before you start can feel awkward, as if you do not trust the customer. It is normal business. A kitchen fitter in Bristol buys the cabinets weeks before the job is done. A wedding photographer in Cape Town turns away other couples once a date is booked. A deposit covers those costs, and it shows the customer means to go ahead. Here is how much to ask for, how to invoice it, and how to show it on the final invoice.

Deposit, advance, retainer: the words

Deposit or advance payment: part of the price, paid before work starts. It counts towards the total. Most small businesses mean this.
Payment in advance: the whole price before work starts. Common for small orders and first orders.
Retainer: a regular amount paid ahead for ongoing work, usually every month. See recurring invoices.
Security deposit: money held against damage or loss and given back at the end, as with a rental. It is not part of the price, and the tax rules for it are different.

The rest of this post is about the first kind.

How much to ask for

Type of work	Usual deposit	Why
Services with little cost up front, like design, writing or consulting	25% to 50%	It shows the customer is serious and covers your first weeks.
Work where you buy materials, like building, printing or furniture	At least the cost of the materials	You are not out of pocket if the job stops.
Custom goods you cannot sell to anyone else	50% or more	A cancelled order leaves you with stock nobody wants.
Events with a fixed date, like catering or photography	25% to 50% to hold the date	You turn other bookings away once the date is taken.
A first order from a new customer abroad	50% to 100%	Chasing an unpaid invoice across a border is slow and costly.

A simple test: if the customer walked away the day after you started, what would you have lost? The deposit should cover at least that. Some countries limit the deposit a business may take from a consumer for certain kinds of work, such as home building or travel, so check the rule for your trade.

Ask before the work, in the quote

A deposit that first appears on an invoice is a surprise. Put it in the quote, so the customer agrees to the price and the deposit together. A quotation or proforma invoice is the right place. Wording you can copy:

The ask: “A deposit of 30% (£2,400.00) is due on acceptance. Work begins when the deposit is received.”
The balance: “The balance of £5,600.00 is due within 7 days of completion.”
If the job is cancelled: “If the order is cancelled after work has begun, the deposit covers the materials bought and the work done up to that day. Any amount left over is refunded.”
Holding a date: “The deposit holds your date. We do not take another booking for that day once it is paid.”

Be careful with the words “non-refundable”. In many countries a business can keep only what it has really lost when a consumer cancels, whatever the quote says. Saying what the deposit covers is clearer and easier to defend.

How to invoice the deposit

Once the customer accepts, send an invoice for the deposit alone. It is a normal invoice, with the next number in your series (see how to number invoices) and its own due date. It should show:

what the job is and its full price;
that this invoice is the deposit, and what share it is: “30% advance required to begin work, of £8,000.00”;
the tax on the deposit, if tax applies;
a short due date, often “on receipt”, since work waits for it.

Some businesses send a proforma or a payment request first and issue the invoice only when the money arrives. Which is right depends on your tax rules, so ask your accountant once and then do it the same way each time.

Tax on a deposit

In many countries, tax is due on a deposit when you receive it or invoice it, not when the job ends. A few examples, in short:

United Kingdom: a deposit that is part of the price normally creates a tax point, so VAT on it is due when you receive it or issue the VAT invoice, whichever is first.
India: as the rules stand, GST is payable on an advance received for services, while advances for goods are taxed when the invoice is issued.
A deposit that is given back, like a security deposit, is usually not taxed unless you keep it.

Rules differ by country and change over time. The safe habit is the same everywhere: charge tax on the deposit at the rate for the job, and bill the rest of the tax with the balance, so the two invoices together carry the tax on the full price exactly once.

How to show it on the final invoice

There are two common ways. Both are fine. Pick one and keep to it.

1. Bill only the balance

The final invoice is for what is left: £5,600.00 of £8,000.00. It names the job, the full price and the deposit invoice, so the customer can see how the numbers add up. This is the simplest way where tax was charged on the deposit, because no amount is taxed twice.

The final invoice bills only the balance. It names the job, the full price and the deposit already paid, so the customer can see how the numbers add up.

2. Bill the full price and take the deposit off

The final invoice lists the whole job, then a line “Less deposit paid on 4 Nov 2026, invoice OG/2026/0052: £2,400.00”, and the balance due. It reads well, but be careful with tax: if the deposit invoice already carried tax, the final invoice must not count that part of the sale again. Your accountant can tell you how your country wants this shown.

Either way, never raise a second invoice for the full price next to the deposit invoice. Your sales and your tax would be counted twice, and the customer would seem to owe more than the job cost.

If the job changes or is cancelled

The price goes up or down. Leave the deposit invoice alone and adjust the balance invoice.
The job is cancelled and you give the deposit back. Issue a credit note against the deposit invoice and refund the money. Do not delete the invoice.
The job is cancelled and you keep part of it. Credit and refund the part you are not keeping, and tell the customer in writing what the rest covered.
The customer does not pay the deposit. Do not start. A polite note is enough: “We have the date held for you until Friday. Work starts as soon as the deposit arrives.”

For a long job, one deposit and one final invoice may leave too much unpaid in the middle. Split it instead; see billing a project in stages.

In Openn InvoiceOn a quotation, choose Ask for a deposit and set it as a percentage or an amount. The quotation then shows the deposit and the balance. Your customer accepts on the quotation's link, and the advance invoice is drafted for you: choose “Check and issue it”. It carries the line “30% advance required to begin work, of £8,000.00”, its share of the tax and the next number in your series. The job is kept under Projects, with the balance as its second stage. When the work is done, choose “Stage reached” and a draft invoice for the balance is ready to check and issue. It shows the project total, the deposit paid and the project balance. A deposit you give back is a credit note against the advance invoice.

The short version

A deposit is part of the price, paid before work starts. Ask for at least what you would lose if the job stopped.
25% to 50% is usual. Ask for more for custom goods and first orders from abroad.
Put the deposit, the balance and what happens on cancellation in the quote.
Invoice the deposit by itself, as a normal invoice that names the job and the full price.
In many countries tax is due on the deposit when it is paid or invoiced. Check yours.
On the final invoice, bill only the balance, or bill the full price less the deposit. Never bill the full price twice.
To give a deposit back, issue a credit note and refund it.