Deposit Invoice vs Final Invoice: What to Send and When

Short answer

A deposit invoice requests an agreed upfront payment before work starts or goods are delivered. A final invoice records the completed sale and shows the total, deposit already paid, and remaining balance. Keep the two documents clearly connected with project details and invoice references.

Deposit wording and tax treatment can vary by jurisdiction. Use the proforma invoice guide when the customer needs a preliminary cost document, and confirm local requirements before issuing a tax invoice.

When to request a deposit

A deposit can make sense when you need to reserve time, purchase materials, begin a long project, or reduce the risk of completing work without payment. Common examples include:

• Website and design projects
• Consulting engagements with a fixed start date
• Custom manufacturing or made-to-order goods
• Events, bookings, and trade services
• Long projects billed by milestones

Agree the deposit percentage or amount before work begins. State what the deposit covers and how it will be applied to the final invoice.

What to include on a deposit invoice

Make the deposit request specific. Include:

• Customer and supplier details
• A unique invoice number
• Project or order description
• Deposit amount and currency
• Tax or other charges when applicable
• Payment due date and instructions
• Total project value, if useful for context
• A note explaining whether the deposit is credited against the final invoice

Use a separate invoice number from the final invoice. Your invoice numbering system should make the relationship easy to trace without reusing a number.

Deposit invoice example

For a $4,000 website project with a 30% deposit, the deposit invoice might show:

• Project total: $4,000
• Deposit due before work starts: 30%
• Deposit amount: $1,200
• Remaining project balance: $2,800

The document should clearly say whether the $1,200 is a deposit request or a final charge for a completed milestone. Do not label a preliminary quote as an invoice if it is not requesting payment.

How to issue the final invoice

When the work or milestone is complete, create a new final invoice. Show the full project amount, any approved changes, the deposit received, and the remaining balance.

Example:

• Completed project total: $4,000
• Deposit received under INV-1060: -$1,200
• Balance due under final invoice INV-1072: $2,800

Include the original deposit invoice number in the notes. This helps the customer and your bookkeeper match the payment. The invoice record keeping checklist covers how to store the related documents.

Deposits, receipts, and refunds

When the deposit is paid, send a receipt if the customer needs confirmation. A receipt confirms payment; it does not replace the final invoice.

If a project is cancelled, follow the contract for applying or refunding the deposit. Keep the payment confirmation, refund record, and customer communication together. Avoid editing the original deposit invoice to hide the payment history.

Payment terms for the remaining balance

The final invoice can use different terms from the deposit, such as due on completion or Net 15. State the final due date clearly and include a payment link or bank details when useful. The invoice payment link guide explains how to make online payment easier.

FAQ

Is a deposit invoice the same as a proforma invoice?

No. A deposit invoice requests a specific payment under an agreed arrangement. A proforma invoice is generally a preliminary document used to show expected transaction details. The exact tax treatment depends on local rules.

Should the deposit have its own invoice number?

Yes. Use a unique invoice number for the deposit and another for the final invoice. Link them through notes or references.

What if the final invoice is smaller than the deposit?

Show the final total and the deposit already received. The remaining balance may be zero, or the customer may be due a refund or credit according to the agreement.