Advance invoice

What is an advance invoice?

With an advance invoice, the supplier asks the customer for a partial advance payment on the goods and/or services to be supplied. The basis of an advance invoice is usually an order confirmation or quote stating the total amount to be invoiced for the assignment, but that is not mandatory. Entrepreneurs ask for an advance, for example, because they have to buy materials in advance for the assignment, but also because it is a large assignment with a lot of preparation, so that if the customer pulled out, they would suffer a substantial loss. The advance then acts as insurance against the cancellation of an order. The supplier determines the amount of the advance, as the law lays down no rules on this.

What does an advance invoice state?

In principle, an advance invoice states the same information as a regular invoice, with the difference that the item description is sometimes more concise than on the final invoice. If there is a quote, the description may then refer, for example, to one or more items on the quote, whose date and number are stated. Be careful: strictly speaking, the VAT administration must be able to check whether the appropriate rates are used, so it's better to provide more specifications rather than fewer.

The advance may be based on a percentage of the total amount or be a fixed price.

Take VAT into account

Anyone liable for VAT must also apply VAT on an advance invoice.

Example: the quote for an assignment states € 3.000,- + 21% VAT = € 3.630,- incl. VAT

Situation A: You want to create an advance invoice for 30% of the total amount.

  • The advance invoice amounts to € 900,- + 21% VAT = € 1.089,- incl. VAT
  • The final invoice amounts to € 2.100,- + 21% VAT = € 2.541,- incl. VAT

Situation B: You want to create an advance invoice for a total amount of € 1.000,-.

  • The advance invoice then amounts to € 826,45 + 21% VAT = € 1.000,- incl. VAT
  • The final invoice amounts to € 2.173,55 + 21% VAT = € 2.630,- incl. VAT

The advance invoice must be included in the periodic VAT return.

Advance invoice in onFact

onFact lets you very easily copy a quote to one or more successive advance invoices. With the appropriate reference to the quote, the program itself calculates the remaining amount to be invoiced for the final invoice. This reduces the chance of errors and ensures that the VAT amounts are calculated and stated correctly.