How to Create an Invoice with Partial Payment Request? Know Here

What Does a Partial Payment Mean?

Partial payment refers to payment in terms of parts of the total due amount. This simply means the client pays a small part rather than giving a full payment. It is also referred to as a down payment, an installment payment, or a part payment.

Partial billing is a useful concept for both parties involved (businesses and clients). Businesses can keep their cash flowing painlessly. Also, clients can pay the amount in installments when it is not possible to make the whole payment during financial difficulty.

To understand the partial payment example, let’s suppose a person purchases a product for $1,000 but pays only $500 at the moment. So, he pays the remaining amount ($500) later on. This is known as partial payment.

How to Request Partial Payment Upfront?

Small businesses and freelancers can ask clients to make a partial payment by following these tips:

1. Understanding the Project Scope

Always initiate with an understanding of the project when you think about partial payment requests. You must work on creating accurate estimates to ease your partial payment. Choosing a customized estimate template is one of the best approaches for this. This reduces manual effort and leads to high accuracy.

2. Discussing Payment With the Client

Before making the payment, you must discuss the payment with the client. It must include:

• Upfront with the payment amounts
• Payment deadlines
• Accepting payment method
• Total cost of the full project
• Final payment deadline

3. Mention the Deposit Into Your Contract

You must mention the deposit details in the customer contracts to assure you and the client understand the details of the project payment. It is also useful in protecting you legally when the client fails to make the payment.

4. Send the Invoice With Your Contract

Sending invoices with your contract is a worthwhile tactic. On-time payment chances are higher when your client receives an invoice along with the contract. Get your client’s signature as soon as possible because it secures your payment and helps you to gain early payment. Moon Invoice offers more than 66 invoice templates for creating custom invoices.

5. Initiate the Work After Receiving the Payment

The payment is done! You can then begin work. Send the final invoice to the client when you finish the work.

When to Request Partial Invoice Payments?

There are many situations when a business requests partial invoice payments. These situations are as follows –

When Your Client Has Financial Issues

Releasing a partial payment invoice can be a support for your client in his financial struggle. When you release the partial payment, it enables your client to make the payment in installments. Thus, the client has the flexibility to make the payment in tough circumstances.

When You Handle a Large Project

Handling large projects is not a piece of cake. Regarding billing, you need to release an installment invoice. The request for partial invoice payment is necessary when handling a large project. This helps in keeping the steady cash flow active and prevents the business from suffering the pending due amount.

When There Is a Need to Cover Upfront Costs

Businesses need to issue a partial payment at the time of significant upfront investments. This is a common scenario in the construction industry. Suppose your construction company is spending on material purchasing and hiring resources. This is done after signing a contract.

7 Benefits of Accepting Partial Payment

1. Improving Cash Flow

A partial payment approach is helpful for businesses to refine and manage cash flow. Instead of waiting alone for a large amount of payment, professionals can get some part of the payment. This ensures a smooth flow of payments and leads to steady income. Also, partial payment gives rise to manageable payments.

2. Strengthen Client Relationship

Partial payment gives more flexibility to clients. Businesses offer high flexibility to the customer and allow them to make payments in installments. This gives rise to positive client relationships and also leads to loyalty and customer satisfaction. Hence, it makes repeat business chances more favorable.

3. Reducing the Risk of Payment Default

Payment default occurs many times. However, partial payment default is a good solution to overcome this problem. With this, customers feel less burdened about submitting the amount and commit to the payment. Hence, it reduces the risk of payment default.

4. Better Financial Strategy

Partial payments make companies more capable of making decisions about their financial planning. Business owners can have better insight into cash flow and can easily manage their budgets.

5. Upselling Opportunities

Partial payments are a great tool for upselling opportunities. It boosts the chance of buying more products or services which helps to make good sales.

6. Win Marketing Competition

Businesses can win the market competition and could stand out in the market when offering partial payment. Clients usually prefer to deal with the business that offers partial payment.

7. Enhance the Market Reach

Partial payments are good for attracting a large pool of customers. It is especially helpful for businesses dealing with clients having tight budgets and limited financial resources. Thus, it helps the business to keep a smooth flow of the deal.

How to Create an Invoice With Partial Payment Requests Through Moon Invoice?

Generating partial payment invoices is an approach of few clicks. Firstly, you need to create a standard invoice that covers the details below.

• Business name, address, and contact details
• Client’s name, address, and contact details
• Invoice date, invoice #, PO #, currency and due date
• Description of the product or service offered to the client along with the unit price, quantity, applicable tax, and discount
• Payment methods you accept
• Additional terms and conditions relating to payment terms or notes

You can create invoices in any format – Google Docs, Google Sheets, PDF, Word, and Excel. Once you create the standard invoice, review it to ensure no errors are left in the invoice. Now, to add a partial payment entry, you need to follow the below steps –

1. Log in to your Moon Invoice account
2. Navigate to the Invoice section and select the invoice for which you want to add partial payment
3. Click on the “$” sign at the top and select ‘Add Payment’
4. Enter the partial payment amount that you receive
5. The due amount will automatically be visible on the red mark
6. Click on the ‘SAVE’ button and the due amount will be displayed on the final invoice
7. The invoice status will be shown as Due

Once you finalize the invoice, you can share it with your client. Further, you can easily handle partial payments with Moon Invoice. It offers all the advanced features to manage end-to-end invoices.

7 Mistakes to Avoid When Creating a Partial Payment Invoice

Before making requests for partial payments to your client, it’s necessary to avoid the following mistakes.

1. Wrong Information on Invoice

Wrong and incorrect information negatively affects the whole process. It not only showcases the unprofessional image of your business but also delays the billing operation.

2. Missing Payment Terms

Payment terms are useful for clients to be aware of crucial conditions before making a payment. Not mentioning payment terms in the invoice can be a cause of missing or delayed payments. As the client will have no clear roadmap he can make mistakes while paying the amount.

3. Not Offering Multiple Payment Options

When you release the partial payment invoice, you should take care of payment methods. It is a good practice to provide various payment options to the client. With this, it’s easy for businesses to accept partial payments.

4. Not Acknowledging Client

Once you receive partial payments, you must offer a partial payment receipt for each payment. This keeps a good bond between both parties while showing a professional image of the business. Also, releasing a receipt is useful to keep a record of every transaction.

5. No Itemizing of Charges

It can be a big mistake when you forget to break down the partial payment portion and total cost. You must itemize the charges and highlight the partial payment covers.

6. Avoiding Tax Calculation

Forgetting to address tax in the partial payment invoice is another mistake that you must avoid. Keep everything transparent when it’s about taxation.

7. Making the Layout Complicated

The invoice layout should be simple and professional. A complex design can confuse the user because, in such a layout, details are not presented properly. One of the best solutions is choosing a professional & custom invoice template. This ensures you make professional invoices while assuring accuracy.

Verdict

Partial payments are helpful for businesses and clients. They can keep the cash flow in a manageable flow and prevent businesses from suffering payment default risk. The client has full flexibility to make the payment and avail of peace of mind in case of financial issues.

Additionally creating a partial payment upfront request is effortless with Moon Invoice. Whenever you think about creating an invoice with partial payment request, follow the above steps.

Frequently Asked Questions