Definition
Billing in advance means invoicing a client before the service period begins, so payment arrives at or before the time the work is delivered. It is standard for subscriptions, memberships, retainers, rent, and insurance. It improves the seller's cash flow and reduces the risk of doing work that is never paid for.
Also called: Advance billing, Prebilling, Upfront billing
Billing in advance in practice
Because the money is received before the work is done, accrual-basis businesses record advance billings as deferred revenue and recognize the revenue as each period is delivered.
State the service period clearly on each advance invoice, for example "Monthly retainer: August 1 to August 31", and explain in your terms what happens if the client cancels partway through a paid period.
Example
A social media manager invoices her $1,500 monthly retainer on the 25th of each month for the following month, due on the 1st, so she is paid before each month's work begins.
Frequently Asked Questions
Is billing in advance the same as a deposit?
Not quite. A deposit is a partial payment before a project. Billing in advance charges the full amount for an upcoming period, such as a month of service, before it starts.
Do clients accept being billed in advance?
For subscriptions and retainers, yes, it is the norm. For one-off projects, most clients expect a deposit with the balance on completion instead.
Related terms
- Billing in arrears Billing in arrears means invoicing a client after goods or services have been delivered for a period, rather than before it starts.
- Deferred revenue Deferred revenue is money a business has received, or invoiced, for goods or services it has not yet delivered.
- Retainer A retainer is a recurring fee a client pays to reserve a professional's availability or to prepay for a set amount of work each period.
- Recurring invoice A recurring invoice is an invoice that is generated automatically on a fixed schedule, such as monthly or annually, with the same client, line items, and terms each time.
- Cash in advance Cash in advance (CIA) is a payment term requiring the buyer to pay the full amount before the seller ships goods or starts work.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.