Partial invoice
Tradesmen, agencies and many other industries use partial invoices.
Find out here what you need to bear in mind.
Definition: What is a partial invoice?
A partial invoice is written when you want to settle a certain part of a total invoice. This can be a good idea, especially for large deliveries of goods and large projects. But only if the partial invoice is correct. With a partial invoice, also called a partial payment or an invoice on account, the customer and supplier agree to pay for the service or goods in parts before completion or the complete delivery. This can be advantageous for both sides. A progress bill is therefore particularly common for so-called move-by-move transactions, which take a little more time to complete.
Partial invoices are, to a certain extent, subject to reservation. This is because contractors write a progress invoice when a certain part of the service has been performed. However, the entire project has not yet been completed or the goods have not yet been delivered in full. The customer has therefore not yet accepted the goods or services.
This belongs in a partial invoice
Although there are no legal requirements for the process, you must still adhere to certain mandatory information when writing a progress bill.
The good news is that the same mandatory information applies to a progress bill as to other bills. You can therefore use this as a guide when you want to write a progress bill.
- Information on a partial invoice:
- Designation of the invoice: The term “partial invoice” must be mentioned on the invoice
- Invoice number: Pay attention to consecutive numbering. Also indicate how many partial invoices the customer has in front of him.
- Your details: Name, company and address
- Details of the invoice recipient: Name, company and address (Billing address)
- Date of the partial invoice
- Delivery period: The period or time at which the service was performed that you are now billing for must also be stated on the invoice. If you perform the service only in the future, the expected delivery date belongs on the invoice
- Description of the goods or service: Describe the service you are billing for as accurately as possible so that there are no discrepancies later on
- Current tax rate
- Your Sales tax identification number (if you report sales tax)
- Reason for exemption from sales tax
- Net and gross amount
Our tip: To ensure that both you and your customer have an overview of which services have already been billed, the following procedure is recommended: Write another document in addition to the progress bill. In this document, you list the services you have already provided and the services the customer has already paid for. You can also note planned services there and tell the customer the expected invoice amount.
The advantages of a partial invoice
For freelancers in particular, it can make sense to agree on a progress bill. After all, if they take on large projects that require a lot of working time and therefore have a relatively long duration, they certainly don’t want to go without payment at the end.
But a progress invoice is also quite common for deliveries of goods. Imagine you work as a building contractor. In this case, you would certainly not want to be paid only when the finished house stands. After all, you have to pay your running costs in the meantime.
Clients of longer-term projects also benefit from agreeing on partial invoices. This gives them planning security and, for example, they already know at the beginning of a month what amount they will have to pay to the service provider or supplier at the end.
Partial invoices are there for these and other cases. There is no legal regulation for this particular form of invoice. This means that both parties to the contract must independently agree on a procedure.
Very simple: Create partial invoice with easybill
Does that sound like a lot of work? Then save yourself the trouble and let easybill create your partial invoice, interim invoice and final invoice.
Because with our invoice program, you are guaranteed not to forget any important information on your invoices – a real plus point. But that’s not all: You can also have easybill take care of the sometimes tedious final invoice. Guaranteed without errors and complete as well. So what are you waiting for?
Down payment invoice and final invoice
When the project is complete or all goods have been delivered, write a final or closing invoice. Make sure that you also clearly label this invoice as such.
In the final invoice, you list the total amount and once again summarize all the services that your customer has already paid for. This gives both you and the customer an overview of the actual costs incurred.
By the way: If you show sales tax on your partial invoice, you have to pay it to the tax office after each invoice (so-called debit taxation). Unfortunately, you cannot wait to pay VAT until you issue the final invoice.
The situation is different with a down payment invoice. Some entrepreneurs and especially freelancers agree with their clients on a down payment upon project acceptance. If you decide to do so, remember to make sure that this invoice is a down payment invoice.
This gives you an advantage: the sales tax on a down payment invoice is only due when the amount is credited to your account. In the case of large invoice amounts, it may well pay off if you do not have to pay the sales tax before you have received it.
Partial invoice or interim invoice: What is the difference?
From time to time, partial invoices and interim invoices are used synonymously, but strictly speaking they are not.
Partial invoice
For partial invoices, you must also take into account the warranty obligation. In terms of its impact on financial accounting, it behaves like a final invoice in Germany.
Interim invoice
As a rule, the interim invoice is issued as a percentage value.
Partial invoice: You should pay attention to this
Let’s summarize once again: There are certain details that absolutely belong on the progress bill if you want to avoid discrepancies with your customers and the tax office.
These include:
- The correct mandatory information: Make sure you don’t forget any important invoice components on your final invoice
- The correct designation: Decide between partial and partial invoice and name the document accordingly
- The correct final invoice: At the end of the project, you must offset the payments already received against the amounts still outstanding. Be careful and, if in doubt, double check the invoices.
