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Create and offset down payment invoices

Large orders tie up your resources for months. With down payment invoices you bring the money in while the work is still running.

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What is a down payment invoice?

A down payment invoice is an invoice for part of an order that you issue before the overall service is complete. Your customer pays in several steps and you receive your money earlier. At the end comes the final invoice, in which all down payments already made are offset.

This arrangement is not required by law: as a rule, legislators assume that payment is due once the service has been delivered in full. How many instalments you agree, and how large they are, is therefore purely a matter of contract between you and your customer.

Secure your liquidity

Salaries and upfront costs are due immediately, while the final invoice only arrives months later. Instalments close that gap.

Spread the risk

You do not carry the full order value yourself. If a payment fails to arrive, you notice early rather than at the end of the project.

Predictable for both sides

Your customer does not have to settle one large sum at the end, but pays along the way in agreed steps.

Down payment invoice or partial invoice?

Down payment invoice
Advance on a service still in progress
Partial invoice
Final billing of a completed part
Timing
before final completion
after a distinct part of the service is finished
What is billed
an agreed percentage or fixed share
the part of the service actually delivered
Conclusion
the final invoice offsets every instalment
stands on its own, further partial invoices follow
Warranty
begins once the overall service is accepted
may already apply to the part that was accepted
Typical case
custom development running over several months
a construction stage or module that is handed over

What belongs on a down payment invoice?

A down payment invoice needs the same mandatory details as any other invoice, plus two things that clearly identify it as an instalment.

The usual mandatory details

Name and address of both parties, tax number or VAT identification number, invoice date, a sequential invoice number, the description of the service, the date or period in which it was delivered, plus the net amount, the tax rate and the tax amount.

What has to be added

First, the explicit wording down payment invoice, so that it cannot be mistaken for a final settlement. Second, a reference to the underlying order and to the position of the instalment, for example 'second instalment of three, order 2026-0147'.

  • Sequential numbering of the instalments
  • Reference to the order or contract
  • A note that a final invoice will follow

How VAT is handled

You state and pay VAT on every instalment. The final invoice then bills the entire service and deducts the instalments already charged, including the VAT attributable to them. That way no amount is taxed twice.

How you proceed in an individual case depends on the contract and on your method of accounting for VAT. Agree the details with your tax adviser.

An example: two instalments and a final invoice

A software company agrees a total of 200,000 euros net with its customer for a large customisation, split into two instalments and a final invoice. Because investment is needed at the start, the larger instalment comes first.

First down payment invoice

Net 100,000 euros, VAT at 19 per cent 19,000 euros, invoice total 119,000 euros gross.

Second down payment invoice

Net 50,000 euros, VAT at 19 per cent 9,500 euros, invoice total 59,500 euros gross.

Final invoice

Total service 200,000 euros net, VAT 38,000 euros, 238,000 euros gross. After deducting the first instalment of 119,000 euros and the second of 59,500 euros, a remaining balance of 59,500 euros gross is left.

Bill instalments without keeping lists on the side

Anyone tracking down payment invoices in spreadsheets eventually loses sight of which instalment has been issued and which has been paid. In projectfacts both sit with the order.

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Billing process with down payment invoices | projectfacts

Creating down payment invoices in projectfacts

You set up the specifics of the instalments once in the order, not in the individual invoice. Under the contract and billing data you choose payment plan as the billing mode and define the individual instalments within it.

The final invoice matters here: it automatically adds up the down payments already made and the amount still outstanding, and carries both into the closing invoice. So there is nothing left for you to reconcile by hand.

  • Payment plan and billing rules directly in the order
  • Instalments defined freely as a percentage or a fixed amount
  • The final invoice offsets the instalments automatically
Tie instalments to project progress | projectfacts

Tie instalments to project progress

Because project management and billing in projectfacts share the same data, you can break your order items down into subprojects and work packages and attach the instalments to them.

When a work package that forms the basis for a down payment is set to 'completed', projectfacts lets you know. You see the note in the system and the billable amount is shown along with it. Forgotten instalments are no longer an issue.

  • A note in the system as soon as an instalment falls due
  • The billable amount is determined automatically
  • Invoicing and dispatch at the push of a button

Posting down payment invoices and keeping track

A down payment invoice is not finished once it has been sent. It has to be posted, monitored and correctly offset at the end.

Monitoring open instalments

The document overview shows you, for every order, which instalments have been issued, which have been paid and which are still open. If a payment fails to arrive, receivables management steps in with reminder levels and payment reminders.

  • The status of every instalment visible on the order
  • Open items and due dates at a glance

Handover to accounting

Down payment and final invoices flow into financial accounting together with all other documents and can be passed to your tax adviser through the DATEV interface. As an e-invoice in ZUGFeRD or XRechnung format you send instalments just like any other invoice.

  • DATEV export for down payment and final invoices
  • Dispatch as ZUGFeRD or XRechnung possible

Down payment invoices with projectfacts at a glance

Payment plan

Define instalments once in the order instead of per invoice

Automatic offsetting

The final invoice deducts the instalments already paid

Tied to progress

A note in the system as soon as a work package triggers an instalment

Open items

Issued, paid and open instalments visible per order

E-invoicing

Send instalments as ZUGFeRD or XRechnung

DATEV

Handover to your tax adviser through the DATEV interface

Take a proper look at the payment plan

In 30 minutes we will show you, using a concrete example, how instalments, project progress and the final invoice fit together in projectfacts.

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Still have questions? We have the right answer!

Give us a call, send us an e-mail or take a look at our FAQ section! We will be happy to answer your questions!

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Frequently asked questions

What is a down payment invoice?
A down payment invoice is an invoice for part of an order, issued before the overall service is complete. The customer pays in several steps; at the end comes a final invoice in which all down payments already made are offset.
What is the difference between a down payment invoice and a partial invoice?
A down payment invoice requests an agreed percentage or fixed share before final completion. A partial invoice, by contrast, bills a distinct part of the service that has already been delivered. The difference affects VAT and warranty, among other things.
How large may the instalments be?
There are no statutory requirements for this. The number and size of the instalments are a matter of freedom of contract and therefore rest solely on the agreement between supplier and customer.
How is VAT handled on down payment invoices?
VAT is stated and paid on every instalment. The final invoice bills the entire service and deducts the instalments already charged, including the VAT attributable to them, so that no amount is taxed twice. The exact treatment depends on the contract and on your method of accounting for VAT and should be agreed with your tax adviser.
What has to appear on a down payment invoice?
All the usual mandatory invoice details: name and address of both parties, tax number or VAT identification number, invoice date, sequential invoice number, description of the service, the period in which it was delivered, plus net amount, tax rate and tax amount. In addition, the explicit wording down payment invoice and a reference to the order and the position of the instalment.
How do I create a down payment invoice in projectfacts?
You store the instalments once in the order: under the contract and billing data you select payment plan as the billing mode and define the individual instalments within it. The invoices are then generated from that plan.
Does projectfacts offset the instalments in the final invoice automatically?
Yes. The final invoice set in the payment plan automatically adds up the down payments already made and the amount still outstanding, and carries both into the closing invoice.
Can I tie instalments to project progress?
Yes. Order items can be broken down into subprojects and work packages. When a work package that forms the basis for a down payment is set to completed, projectfacts notifies you and shows the billable amount.
How do I keep track of open instalments?
The document overview shows you, per order, which instalments have been issued, paid or are still open. If payments fail to arrive, the reminder levels and payment reminders from receivables management take over.
Can I send down payment invoices as e-invoices?
Yes, down payment and final invoices are sent like any other invoice in ZUGFeRD or XRechnung format. For accounting they are available through the DATEV interface.