Evrenus Fırat Polat · ·
For larger jobs, waiting until everything is finished to see any money is a real risk: for materials, for your time, and for cash flow if the project runs long. A deposit, invoiced before work begins, is the standard way to share that risk with the client rather than carrying all of it yourself.
When a deposit makes sense
Deposits are most common when:
- Materials need to be purchased upfront. A deposit covers the cost so you're not fronting it yourself.
- The engagement is long or the client is new. It reduces the amount of unpaid work outstanding at any point.
- The work is custom or non-refundable in effort. A deposit signals genuine commitment from the client before you invest time.
- Slots are limited. If you turn down other work to hold dates for this client, a deposit compensates you if they cancel.
A typical range is 20-50% of the total, though larger deposits (or even full payment upfront) aren't unusual for custom work with significant material costs.
Invoicing for a deposit
Treat the deposit as its own invoice, referencing the total project cost and clearly labeling it as a deposit or down payment, not the full amount. State plainly what it covers and what remains: "Deposit (30% of $4,000 total project) — $1,200 due on acceptance, remaining $2,800 due on completion." This avoids any confusion later about how much has actually been paid.
Handling the remaining balance
When the project is complete, the final invoice should clearly show the total, the deposit already paid, and the balance actually due now, not just repeat the original total as if nothing had been paid. Our invoice discount calculator and invoice calculator can help you work out the remaining figure if the scope or price shifted slightly from the original estimate.
Worked example, including tax
A wedding photographer quotes $4,000 plus 8% sales tax. The terms say a 30% deposit secures the date.
Deposit invoice:
- Deposit: 30% × $4,000 = $1,200.00
- Tax on deposit at 8%: $96.00
- Total due now: $1,296.00
(Whether tax is charged on a deposit when it is received, or only at the time of supply, depends on the country and the tax. In some places, tax is due at the earlier of payment or delivery. Check with your accountant.)
After the wedding, the client also orders an extra album for $300 (plus tax). Final invoice:
- Photography package: $4,000.00
- Album: $300.00
- Subtotal: $4,300.00
- Tax at 8%: $344.00
- Total: $4,644.00
- Less deposit paid (including tax): $1,296.00
- Balance due: $3,348.00
Check: $4,644.00 − $1,296.00 = $3,348.00 ✓. The final invoice shows the deposit as a clear deduction so the client sees how it was used.
Step by step: running a deposit
- Decide your policy: percentage, due date and whether the deposit is refundable.
- Write it in the quote or contract: "A 30% non-refundable deposit is due on acceptance. Work begins when it is received."
- Issue the deposit invoice when the quote is accepted. Our invoice generator can do this, and a payment link makes it quick.
- Do not start work or order materials until the deposit arrives.
- Send a receipt when it is paid. Use the receipt generator.
- Invoice the balance at completion, or at milestones (see progress invoicing).
- If the project is cancelled, follow what you wrote about refunds and credit notes (see credit notes).
Refundable or not?
Decide before you ask. A refundable deposit is a security payment. A non-refundable one compensates you for reserved time and early costs. Consumer protection laws in some countries limit non-refundable deposits or require specific wording, particularly for consumers. Use clear wording and ask a legal or accounting professional if the amounts are large.
Put the terms in writing before you start
Whatever deposit policy you use, state it before work begins, not as a surprise on the first invoice. A short line in your quote or estimate ("A 30% deposit is required to begin work, with the balance due on completion") means the client isn't caught off guard, and gives you clear grounds to pause work if the deposit isn't paid. See also estimate to paid invoice.
Common mistakes
- Starting work before the deposit arrives. You lose your leverage.
- Forgetting to show the deposit on the final invoice. The client may pay twice, or dispute the total.
- Ignoring tax on the deposit. Rules vary, so check them.
- Vague wording. "Some money upfront" is not a term.
- Calling a deposit revenue too early. For accounting purposes, a deposit may be a liability until work is done. Your accountant can advise.
- No receipt. Always confirm receipt in writing.
A deposit isn't about distrust. It's about making sure neither side is carrying all the financial risk of a project that hasn't happened yet. Deposits also improve cash flow, as explained in cash flow basics, and fit naturally into your payment terms.
FAQ
How much deposit should I ask for?
Between 20% and 50% is common. Choose an amount that covers your upfront costs and shows commitment.
What if the client refuses to pay a deposit?
Offer smaller milestone payments or shorter terms. If they refuse every protection, consider whether the risk is worth taking.
Can I keep the deposit if the client cancels?
Only if your agreement says so and local law allows it. Keep the amount reasonable, relative to your real loss.
Should the deposit be a separate invoice or part of the main one?
A separate deposit invoice is clearer. The final invoice then lists the deposit as already paid.