Proposals · Glossary
What is a deposit invoice?
A deposit invoice is an invoice for part of the agreed price, usually 10 to 50 percent, issued when a quote or proposal is accepted and paid before work starts. It secures the booking, covers early costs and shows commitment. The final invoice later charges the balance and shows the deposit already paid.
A deposit is the simplest protection a small business has against late cancellations and unpaid materials. The deposit invoice is how it is requested, and it has to line up exactly with the balance invoice that follows.
Nuwan Madhusanka · Co-founder
4 min read · Published
How a deposit invoice works
When the customer accepts the quote, the business issues an invoice for the agreed deposit, either a percentage of the total or a fixed amount. It is due straight away or within a few days, and work or ordering starts once it is paid. Later, a final invoice charges the full price, subtracts the deposit already received and asks for the balance. The two invoices together should add up to exactly the accepted total, including GST, so the customer can follow the money without a spreadsheet.
GST on deposits
For a GST registered business, GST is generally payable on a deposit that is a part payment for the supply in the tax period the payment is received or the invoice issued, whichever comes first, if you account on a non cash basis. The deposit invoice should therefore show GST on the deposit amount, and the balance invoice shows GST on the remainder. A refundable security deposit that is not yet a payment for anything is treated differently, so ask your accountant if your deposit is held as security rather than as part payment.
Choosing the amount
Common deposits are 10 to 30 percent for services and 30 to 50 percent where the business must buy materials or turn away other work, such as kitchens, weddings or events. Some building work in Australia has state limits: for example, residential building contracts in several states cap the deposit a builder can take, commonly at 10 percent or 5 percent depending on the contract value. Check the rules for your industry and state before choosing a figure.
Common mistakes
Starting work before the deposit clears removes the protection the deposit was meant to provide. Issuing the balance invoice for the full amount, without subtracting the deposit, makes the customer think they owe twice. Forgetting to say whether the deposit is refundable leads to disputes on cancellation. And asking for a deposit above a statutory cap in building work can make the contract harder to enforce.
Where it shows up in the product
A proposal's deposit can be none, a percent of up to 100, or a fixed amount, and the pricing table then shows Deposit due now and Balance under the Total. When the client accepts a proposal with a deposit, an issued deposit invoice due that day is created along with a draft balance invoice, and every issued invoice is emailed to the signer. The client can pay the deposit straight away from the accepted screen through Stripe Checkout when the owner has connected Stripe on a paid plan.
Questions people ask
Is a deposit invoice a tax invoice?
It can be. If you are registered for GST and the deposit is a part payment for the supply, the deposit invoice should meet the tax invoice requirements, including your ABN and the GST amount. The balance invoice is then a second tax invoice for the remainder. Together they should account for all the GST on the sale.
Is a deposit refundable if the customer cancels?
It depends on your terms and the law. A deposit that is a reasonable pre estimate of your loss is usually kept on cancellation, while an excessive one may be treated as a penalty or an unfair term. Say clearly in the quote whether and when the deposit is refundable, and keep it proportionate to your real costs.
How much deposit should I ask for?
Enough to cover the costs you commit to before the next payment, such as materials or turned away bookings, and no more than the law allows in your industry. For many services that is 20 to 30 percent. For custom made goods it may be 50 percent. Residential building has state caps, so check your state's rules first.
When should a deposit invoice be due?
Usually on acceptance or within a few days. The point of a deposit is to secure the booking before you commit resources, so a long payment term defeats it. State in the proposal that work is scheduled once the deposit is received, and make paying it as easy as possible, for example with a card payment link.
What should the final invoice show after a deposit?
The full price of the work, the GST, the deposit already received with its date or invoice number, and the balance due. Showing the deposit as a deduction makes the arithmetic visible. If the scope changed, add the variations as separate lines so the customer can see why the balance differs from the original quote.
Make one with proposals
The button opens the generator with this use case already described. Change the wording to match your own.
Create a proposal with OneCraftRelated questions
- What is a progress invoice?What is a progress invoice? An invoice for one stage of a larger job, billed as work is completed. How progress billing works, what it shows and when to use it.
- Invoice vs receipt: the request and the proofInvoice vs receipt: an invoice asks for payment, a receipt proves payment was made. When to issue each, what each must show in Australia, and how they link.
- What is a payment link?What is a payment link? A web address that opens a secure checkout so a customer can pay by card without an account. How it works, fees and safety checks.
Step by step in the builder: Send a proposal and get paid.
Written and checked by the OneCraft team. Last checked .