Proposals · Glossary
What is a partial payment on an invoice?
A partial payment is a payment that covers only part of the amount due on an invoice. The invoice stays open with a reduced balance until the rest is paid, credited or written off. It differs from a deposit, which is agreed in advance, because a partial payment usually happens when the client pays less than the invoice asks.
Sometimes a client pays $1,500 against a $2,500 invoice, with or without a note. What happens next decides whether the remaining $1,000 is collected or quietly forgotten.
Nuwan Madhusanka · Co-founder
4 min read · Published
| Term | Agreed in advance | What it covers | Invoice status after |
|---|---|---|---|
| Partial payment | Often not | Part of an issued invoice | Open, with a balance |
| Deposit | Yes, in the quote or contract | An upfront share before work starts | Deposit invoice paid; balance billed later |
| Instalment | Yes, as a schedule | Equal or set parts over time | Each instalment invoice paid in turn |
| Payment on account | Sometimes | Money not yet tied to one invoice | Applied to invoices when allocated |
Why partial payments happen
Partial payments have ordinary causes. A client disputes one line and pays the rest. A client short of cash pays what they can. A client deducts a fee, a retention or a card surcharge without telling you. Or a payment is simply keyed wrongly. The first step is finding out which it is, because the response differs: a dispute needs a conversation about the line, a cash problem may need an agreed plan, and a keying error needs a polite note with the balance. Record the payment straight away against the invoice, with the date and amount, so the balance is visible.
How to record and show the balance
Apply the payment to the invoice it was meant for, leaving the invoice open with a balance due. If you send a statement of account, it should show the original amount, the payment and the balance, and the next reminder should quote the balance, not the full invoice amount. If you account for GST on a cash basis, the ATO rules mean GST is attributed as payments are received, so a partial payment carries part of the GST in the period it arrives. On an accruals basis, the GST was attributed when the invoice was issued, and the partial payment changes nothing for tax.
When to accept one by agreement
Agreeing to partial payments can be a sensible way to recover a debt from a client who genuinely cannot pay all at once. Put the plan in writing: the amounts, the dates, and what happens if a payment is missed. Keep the original invoice open rather than reissuing smaller invoices, so the debt stays in one place. For future work with that client, a deposit or progress invoices may reduce the risk of the same thing happening again.
Common mistakes
Marking an invoice paid because some money arrived is the most common mistake, and the balance is then never chased. Reissuing a new invoice for the balance with a new number is the second, which leaves two open documents for one debt. The third is accepting a smaller amount marked as full and final settlement without thinking, which can be argued as agreeing to waive the rest. The fourth is chasing the full amount after a part payment, which looks careless.
Where it shows up in the product
The proposals module supports a deposit agreed in advance, as none, a percent or a fixed amount, and on acceptance creates an issued deposit invoice and a draft balance invoice. A payment by bank transfer is recorded by marking the invoice paid by hand, so for a client who pays only part of an invoice, keep a note of the amount received and send the balance in your reminder until the full amount arrives. Card payments go through Stripe Checkout on the owner's connected Stripe account.
Questions people ask
Is a partial payment legally binding as full payment?
Not by default. Paying part of a debt does not cancel the rest unless you agree to that. Be careful with cheques or emails marked as full and final settlement; accepting them without comment can be argued as agreement. If you do not accept the smaller amount as final, say so in writing promptly.
Should I issue a receipt for a partial payment?
Yes, if the client asks or if it helps your records. The receipt should show the amount received, the date, the invoice it was applied to and the balance still owing. That gives both sides the same picture and makes a later statement of account or reminder easy to check.
Can a client choose which invoice a payment applies to?
Generally the payer can say which debt a payment is for, and you should follow that if they do. If they do not, apply it in a way you can explain, such as to the oldest invoice, and tell them. Consistent allocation avoids arguments when several invoices are open at once.
Do I charge late fees on the unpaid balance?
Only if your terms allow late fees or interest, and then only on the amount still overdue, not the original total. In the UK, statutory interest can apply to late business payments. In Australia, a late fee must usually be in the agreed terms, and the page on late payment fees covers the limits.
How do I stop partial payments happening?
Make the full amount and the due date obvious, offer an easy way to pay, and take a deposit on larger jobs. If a client often pays in parts, agree a schedule up front with instalment or progress invoices, so each payment covers a whole invoice and nothing is left hanging between them.
Make one with proposals
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Create a proposal with OneCraftRelated questions
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- What does 2/10 net 30 mean?What does 2/10 net 30 mean: a 2 percent discount if paid within 10 days, the full amount due in 30, a worked example, and the annual rate the discount implies.
- What is a deposit invoice?What is a deposit invoice? An invoice for an upfront part payment before work starts: how to set the amount, what it shows and how the balance follows.
Step by step in the builder: Send a proposal and get paid, then Set invoice reminders.
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