Deposit invoices or prepayments help secure upfront payments, ensuring the client’s financial commitment before work on the project begins. This article explains how to create a prepayment for a Fixed Fee project and apply it to invoices as the project progresses.
Create a Deposit/Prepayment for a Fixed Fee Project
Follow these steps to create a deposit invoice for a project:
Navigate to your project
Access the Projects menu and select Projects.
Choose the Fixed Fee project for which you want to set up a deposit or prepayment.
Add a Deposit Contract Line:
Go to the Contract tab within the project.
Click Add line to create a new contract line for the deposit.
Name this contract line Deposit.
Set the line as Fixed Fee and enter the deposit amount. For example, if the client paid a $5,000 deposit, enter this as the amount.
Set the Budget (Sales) value as appropriate for your project but leave the deposit's budget sales amount as it is, since it's not tied to any specific portion of the work.
Save the contract line.
Generate the deposit invoice:
After saving the contract line, click Create Invoice to generate a deposit invoice.
Select the Deposit contract line and click Create to generate a draft invoice.
Review the draft, approve it, and then send the invoice to the client for payment.
Track progress on project deliverables
As the project progresses, your team members will book hours against the various contract lines associated with the project deliverables.
Apply the deposit to the relevant invoice
When you're ready to invoice for completed deliverables, you'll need to apply the deposit.
To do this, go to the Deposit contract line and set the amount to 0. This will ensure that the deposit appears as a negative value on the next invoice.
Save the changes.
Generate the invoice and apply the deposit:
Now, create the next invoice for the project deliverables.
The Deposit contract line will automatically appear as a negative value (e.g., -$5,000), reducing the total invoice amount.
Select the deliverables you want to invoice. For example, if you’re invoicing for "Requirements Gathering and Analysis" for $5,500 and "Design and Development" for $7,200, the deposit will offset these amounts.
Click Create to generate the invoice. In this example, the total invoice amount will show as $7,700, reflecting the deduction of the $5,000 deposit from the total.
When to apply the deposit:
You have flexibility in deciding when to apply the prepayment. It can be applied at any point during the project, depending on the project manager's preference or the agreed-upon payment schedule with the client. To avoid applying the deposit to the invoice, simply exclude it from the list of contract lines when creating the invoice.
