Invoicing deposits: managing partial payments and customer advances

What is a deposit and why request one?

A deposit is a partial payment made before the delivery of a product or complete execution of a service. It commits both parties: the customer commits financially, the supplier commits to carrying out the work.

Not to be confused with earnest money (sum paid with possibility of withdrawal) or an advance (total payment before delivery).

Requesting a deposit is relevant for:

• Long or costly projects requiring initial investments

• New customers whose creditworthiness you don't know

• Bespoke services involving specific costs

The benefits are concrete: you secure your cash flow, obtain solid customer commitment and finance the ongoing project without burdening your cash flow.

Deposit invoice vs proforma invoice: what's the difference?

The deposit invoice is an official accounting document that triggers a payment obligation. It includes VAT, must be numbered and comply with all Swiss invoicing standards.

The proforma invoice is a simple indicative quotation with no accounting value. It presents the conditions of a future transaction but is not legally binding and generates no VAT obligation.

In Switzerland, only the deposit invoice has legal value. Use it to collect a partial payment. Reserve the proforma for international customers requesting an estimate for their customs or administrative procedures.

Warning: a proforma never replaces a real deposit invoice for securing your cash flow or declaring VAT.

How to create a compliant deposit invoice in Switzerland

To issue a compliant deposit invoice, follow these steps:

1. Define the deposit amount (percentage or fixed sum of the total project)

2. Create a separate invoice with explicit mention "Deposit invoice"

3. Indicate the total project amount and the deposit amount requested

4. Calculate and apply VAT on the deposit amount only

5. Generate a QR code compliant with Swiss standards

6. Specify the payment deadline and accepted methods

With BePaid, you create compliant deposit invoices in a few clicks, with automatic VAT calculation and Swiss QR code generation. Numbering is managed automatically to guarantee traceability.

Mandatory information on the deposit invoice

A Swiss deposit invoice must contain:

• Explicit mention: "Deposit invoice" or "Deposit no. 1 on project X"

• Numbering: unique number in your invoicing sequence

• Clear amounts: total project amount excl. VAT, deposit amount excl. VAT, percentage if applicable

• VAT: applicable rate (8.1%, 3.8% or 2.6%) and VAT amount calculated on the deposit

• Reference: related quotation or contract number

• Payment deadline: precise due date

• QR-invoice: QR code with structured reference to facilitate payment

This information guarantees legal compliance and facilitates bank reconciliation when receiving the partial payment.

Calculating VAT on deposits

In Switzerland, VAT is due on each deposit received, not just on the final invoice.

Practical example: project of 10,000 CHF excl. VAT, 30% deposit requested, VAT at standard rate of 8.1%.

• Deposit amount excl. VAT: 3,000 CHF

• VAT on deposit: 3,000 × 8.1% = 243 CHF

• Total deposit incl. VAT: 3,243 CHF

You must declare this 243 CHF of VAT according to your VAT declaration method (agreed services upon invoicing, or services performed upon receipt).

BePaid automatically calculates VAT on your deposits according to current Swiss rates (8.1%, 3.8%, 2.6%).

Issuing the final invoice (balance) after deposits

Once the project is completed, issue the balance invoice which summarises everything:

• Total project amount excl. VAT: 10,000 CHF

• Total VAT (8.1%): 810 CHF

• Total incl. VAT: 10,810 CHF

• Less: Deposit no. 1 already invoiced: -3,243 CHF (with reference)

• Balance due: 7,567 CHF

The VAT on the final invoice represents the difference: 810 CHF (total) - 243 CHF (already declared) = 567 CHF to declare.

Clearly mention deposits already paid with their invoice numbers. This traceability avoids confusion and facilitates reconciliation. BePaid keeps the complete history of your partial payments for transparent management.

Tracking and managing partial payments effectively

With several deposits on different projects, organisation becomes crucial:

• Keep a tracking table: project, total amount, deposits invoiced, received, balance remaining

• Clearly number your deposit invoices (Deposit 1/3, 2/3, 3/3)

• Schedule automatic reminders for unpaid deposits according to the right timing

• Use bank reconciliation to quickly identify partial payments received

BePaid displays the status of each invoice (paid, partial, unpaid) and automatically reconciles your payments with your invoices. You avoid double-entry errors and maintain a clear view of your cash flow in real time.

Accounting for deposits: best practices

From an accounting perspective, a deposit received represents a debt to your customer until actual delivery. It's not yet realised turnover.

Important distinction:

• Deposit receipt: immediate cash inflow

• Revenue recognition: only upon delivery or according to project progress

BePaid is not a complete accounting software, but it generates detailed exports (CSV, PDF) that you can easily transmit to your fiduciary or accountant.

For complex projects with multiple deposits and progressive revenue recognition, consult your accountant. BePaid simplifies invoicing and tracking, your fiduciary handles analytical accounting.

Clauses and conditions to include in your contracts

Before invoicing a deposit, clearly define the contractual conditions:

• Payment schedule: percentage and dates of deposits (e.g. 30% on order, 40% at mid-point, 30% on delivery)

• Refund: conditions in case of cancellation by the customer or by you

• Penalties: late payment, scope modification

• Terms: accepted payment methods, deadlines

Transparency protects both parties. Communicate clearly from the quotation stage to avoid misunderstandings.

For large projects or specific situations, have your general conditions validated by a lawyer. A well-drafted contract prevents disputes and secures your business.

Deposit invoices represent a powerful lever for securing your cash flow and reducing the risk of non-payment. By requesting partial payments before delivery, you maintain healthy cash flow whilst engaging your customers in the commercial relationship.

Remember the essentials: a deposit invoice must contain all mandatory information, correctly calculate VAT, and be followed by a final invoice that deducts amounts already paid. The difference with the proforma is clear: the deposit requires immediate payment, whilst the proforma remains a simple estimate.

To manage your deposits and final invoices effectively, BePaid allows you to create compliant invoices in a few clicks, automatically track partial payments and easily reconcile with your bank accounts. Test free of charge up to 10 invoices, with no commitment or bank card required.