How to manage deposits and proforma invoices in your accounting

Deposit vs proforma invoice: what's the difference?

A deposit is a partial payment that legally binds both parties. It creates a delivery obligation for the seller and a balance payment obligation for the client. The deposit appears in your accounts and VAT is due upon receipt.

A proforma invoice is an informational document with no accounting value. It serves as a detailed quotation or documentation for administrative procedures (customs, budget approval). No VAT is payable and it does not legally bind the parties.

Comparison table:

• Legal value: Deposit = contractual commitment / Proforma = informational document

• Accounting impact: Deposit = recorded in accounts / Proforma = none

• VAT: Deposit = due upon receipt / Proforma = not applicable

• Numbering: Deposit = official invoice series / Proforma = separate series

When to use a proforma invoice?

Proforma invoices are used in three main situations:

1. Detailed quotation for complex projects
When your client needs internal budget approval before committing. The proforma details the services and amounts without creating a payment obligation.

2. International transactions
For exports requiring customs documentation. Authorities often request a proforma to assess goods. Consult our guide on VAT on exports for more details.

3. Client validation before commitment
Before launching a major project, to confirm understanding of the scope and budget.

Mandatory information: separate number (e.g. PRO-2024-001), visible "PROFORMA" mention, issue date, complete contact details, service breakdown, indicative amounts excluding and including VAT, document validity.

How to invoice a deposit correctly

Creating a compliant deposit invoice requires adherence to Swiss invoicing standards. The deposit must be treated as an official invoice with all required legal information.

The deposit invoice must include a payment QR-code compliant with Swiss standards to facilitate payment. The deposit amount generally corresponds to a percentage of the total project (often 30% to 50%).

VAT must be calculated and invoiced on the deposit amount, not on the total project. This distinction is essential for your VAT return.

To explore partial payment management in depth and understand deposit request strategies, consult our comprehensive guide on how to invoice deposits.

Mandatory information on a deposit invoice

A deposit invoice must contain all the legal elements of a standard invoice, plus specific mentions:

• Unique invoice number in your official series (e.g. FA-2024-045)

• Issue date of the deposit invoice

• Complete contact details of your company and the client

• Explicit mention "Deposit" or "Partial payment" in the title

• Project description or relevant service

• Deposit amount excluding VAT and percentage of total if relevant

• VAT calculated on the deposit with rate indication (8.1%, 3.8% or 2.6%)

• Total deposit amount including VAT

• Payment QR-code compliant with Swiss standards

Unlike a final invoice, specify that it is a partial payment and indicate the estimated total project amount.

VAT calculation on deposits

The fundamental rule: VAT is due upon receipt of the deposit, not at final invoicing. You must declare this VAT in your VAT return for the receipt period.

Detailed example:

Web development project: 10,000 CHF excluding VAT
Deposit requested: 30% = 3,000 CHF excluding VAT
VAT at 8.1% on the deposit: 3,000 × 8.1% = 243 CHF
Total deposit amount including VAT: 3,243 CHF

You must declare these 243 CHF of VAT upon receipt of payment, according to the method you use (agreed or effective services). The effective services method is particularly suited to deposits as it aligns VAT declaration with actual receipts.

To understand which method to choose, consult our article on VAT declaration based on invoice or payment.

Managing the balance and final invoice

Once the service is completed or the product delivered, you must issue the final invoice which summarises the entire project and deducts the deposit already paid.

This final invoice must state the total project amount including VAT, then clearly subtract the deposit already paid to obtain the remaining balance due. This presentation avoids any confusion and facilitates payment by your client.

The balance invoice is an official invoice with a new number in your invoicing series. It must contain all mandatory legal information and a QR-code for the balance amount only.

Always reference the previous deposit invoice(s) (number and date) to ensure complete project traceability.

Balance invoice structure

The recommended presentation for a balance invoice is as follows:

Detailed example (continuation of the 10,000 CHF excluding VAT project):

Total project amount excluding VAT: 10,000 CHF
VAT 8.1%: 810 CHF
Total including VAT: 10,810 CHF

Less deposit already paid (invoice FA-2024-045 dated 15.01.2024): 3,243 CHF

Remaining balance due: 7,567 CHF

This clear structure allows the client to immediately understand the calculation. The total project VAT (810 CHF) includes the 243 CHF already declared for the deposit. You will only declare the remaining 567 CHF (810 - 243) at final invoicing.

Systematically mention the number and date of the deposit invoice to facilitate accounting reconciliation and avoid disputes.

Accounting treatment of deposits

The accounting treatment of deposits follows a simple logic: the deposit received is not immediate revenue, but a debt to your client until delivery.

In simplified terms:

Upon receipt of the deposit: you record the cash inflow and create a client debt (deposits received account). The collected VAT is declared.

At final invoicing: you convert the debt into actual turnover and deduct the deposit from the balance receivable.

BePaid is not an accounting firm and we recommend consulting your accountant for precise accounting entries according to your chart of accounts. Our platform facilitates payment tracking and generates the necessary exports for your accounting, but does not replace the expertise of a professional for complex tax matters.

Multiple deposits: organising your payment milestones

For complex or long-term projects, staggering several deposits secures your cash flow and limits risks. The classic strategy: 30% at start, 40% at mid-point, 30% at delivery.

Detailed example: website redesign project at 25,000 CHF excluding VAT

Deposit 1 (start): 7,500 CHF excluding VAT + 607.50 CHF VAT = 8,107.50 CHF including VAT
Deposit 2 (mockup approval): 10,000 CHF excluding VAT + 810 CHF VAT = 10,810 CHF including VAT
Balance (delivery): 7,500 CHF excluding VAT + 607.50 CHF VAT = 8,107.50 CHF including VAT

Link each deposit to a concrete deliverable: contract signature, design phase approval, production deployment. This approach reassures the client and clearly justifies each payment request.

To optimise the management of these milestones, consult our guide on project tracking and invoicing.

Tracking and reconciliation of partial payments

Effectively tracking your deposits avoids invoicing errors and oversights that can be costly. A rigorous tracking system is essential as soon as you manage several simultaneous projects.

Regular reconciliation between your issued deposit invoices and payments actually received allows you to quickly detect payment delays and act accordingly.

Swiss QR-invoices greatly facilitate this reconciliation through automatic payment identification. The QR-code contains all the necessary information to automatically associate a payment with the correct invoice.

A minimum monthly review is recommended to maintain a clear view of your cash flow and anticipate future cash inflows.

Deposit tracking table

Create a tracking table with essential columns:

• Project / Client

• Total amount including VAT

• Deposit(s) invoiced (number and amount)

• Amount(s) received with dates

• Remaining balance due

• Status (pending / partially paid / settled)

Example:

Project A - Client Dupont: 15,000 CHF / Deposit 4,500 CHF (FA-045) / Received 4,500 CHF on 20.01 / Remaining 10,500 CHF / In progress

Project B - Client Martin: 8,000 CHF / Deposit 2,400 CHF (FA-048) / Not received / Remaining 8,000 CHF / Pending

BePaid automates this tracking through its payment tracking functionality, which automatically updates your invoice status upon receipt of payment.

Bank reconciliation and deposits

Bank reconciliation consists of matching payments received in your account with issued deposit invoices. This monthly verification avoids discrepancies and ensures that all your receipts are correctly recorded.

Swiss QR-invoices considerably simplify this process: the QR-code contains a unique reference that allows automatic identification of the paid invoice when importing your bank statements.

BePaid offers a bank reconciliation function that automatically associates received payments with corresponding invoices, including for deposits.

Special cases to manage:

• Partial payment of a deposit: record the amount received and follow up for the deposit balance

• Advance payment: verify that the amount corresponds to the invoiced deposit

Common mistakes to avoid

1. Forgetting to deduct the deposit on the final invoice
Impact: double billing, unhappy client, loss of trust
Solution: always reference previous deposits and clearly display the deduction

2. Incorrectly calculating VAT on multiple deposits
Impact: incorrect VAT return, risk of tax adjustment
Solution: calculate VAT on each deposit individually, not on the total project

3. Numbering proformas in the official series
Impact: accounting confusion, non-continuous numbering of real invoices
Solution: create a separate series (PRO-2024-XXX) for proformas

4. Confusing proforma and deposit in communication
Impact: the client doesn't know whether to pay or not
Solution: systematically clarify the nature of the document sent

5. Not referencing deposits on the balance invoice
Impact: accounting reconciliation difficulties, potential disputes
Solution: always mention the number and date of each deposit invoice

Automate deposit management with BePaid

BePaid simplifies the management of deposits and proforma invoices through features designed for Swiss realities:

Creation of compliant deposit invoices: generate deposit invoices with payment QR-code compliant with Swiss standards in a few clicks. All mandatory information is automatically included.

Automatic VAT calculation: VAT (8.1%, 3.8% or 2.6%) is automatically calculated on the deposit amount, eliminating calculation errors.

Partial payment tracking: visualise at a glance the status of each deposit (invoiced, received, overdue) and the remaining balance due per project.

Balance invoice generation: automatically create the final invoice with deduction of deposits already paid. The calculation is done for you.

Accounting exports: export your invoices and payments for your accountant or accounting software.

Transparent pricing: 20 CHF/month or 200 CHF/year. Free version available (10 invoices, 5 clients) to test without commitment.

Managing deposits and proforma invoices requires rigour, but it secures your cash flow and streamlines your client relationships. Remember the essentials: a proforma invoice remains an informational document with no accounting value, whilst a deposit legally binds both parties and requires proper invoicing with VAT.

Ensure you comply with mandatory information on your deposit invoices, calculate VAT correctly, and structure your balance invoice to avoid any confusion. A tracking table and regular bank reconciliation will help you avoid common mistakes that complicate your accounting.

To simplify this day-to-day management, BePaid allows you to create compliant deposit invoices in a few clicks, automatically track partial payments and generate your balance invoices without calculation errors. Test the platform for free and focus on your business rather than on your accounting documents.