What is an Advance Invoice?
An Advance Invoice is a document issued by the seller to request payment before the goods or services are delivered. This type of invoice is commonly used for large projects, subscriptions, or orders that require an upfront payment. The advance invoice outlines the amount to be paid in advance, with the remainder due upon completion or delivery.
What must an Advance Invoice contain?
Basic Elements:
Invoice number: A unique sequential number for the invoice.
Invoice date: The date when the invoice is issued.
Supply date (if different from the invoice date): When the goods or services will be provided.
Seller details: Business name or personal name, address, VAT registration number (if applicable).
Buyer details: Business name or personal name, address, VAT registration number (if applicable).
Transaction details: Description of goods or services, quantity of items or services, unit price (excluding VAT), total value of the advance payment.
Advance payment amount: The specific amount due as an advance (either as a percentage or a fixed amount), VAT rate.
Total amount due: The total amount of the advance, which will be applied toward the final invoice.
Payment terms: Payment due date (e.g., within 7 days of invoice date), payment methods (e.g., bank transfer, online payment).
Advanced Elements:
Document title: "Advance Invoice"
Remaining balance: A statement indicating the remaining amount due after the advance payment is made.
Statement: Optionally, include the phrase “Advance Payment for [Service/Product Name]”.
When is an Advance Invoice issued?
An Advance Invoice is typically issued:
When a prepayment is required before the goods or services are delivered.
For large projects or services where the full cost is divided into advance payments and remaining payments.
In subscription models or for recurring billing, where the first payment or deposit is required before providing the service or product.
When a custom order or special service requires upfront commitment from the buyer.
Remember:
Always specify the advance payment amount and the due date.
Clearly differentiate between advance payments and final payments. For instance, state that the advance will be deducted from the final invoice amount.
Ensure that the VAT is calculated correctly for the advance amount if VAT is applicable.
If applicable, provide a reminder of the remaining balance and due date for the final payment.
Make sure to include the payment method options and any terms of agreement for the advance payment.