Definition
A deposit is a partial payment made before work begins or goods are delivered, typically 25 to 50 percent of the total. It secures the booking, covers the seller's initial costs, and confirms the client's commitment. The deposit is credited against the final invoice so the client pays only the remaining balance.
Also called: Down payment, Advance payment, Upfront payment
Deposit in practice
Deposits are standard for custom work, events, large projects, and new clients. Invoice the deposit separately with its own number, and show it as a credit on the final invoice.
State whether the deposit is refundable and under what conditions. Non-refundable deposits should be clearly labeled as such before the client pays.
Example
A caterer requires a 50 percent deposit on a $4,000 event. Invoice INV-0301 bills $2,000 upfront. After the event, INV-0318 shows $4,000 total, $2,000 deposit received, and $2,000 balance due.
Frequently Asked Questions
How much deposit should I ask for?
Twenty-five to fifty percent is common. Ask for more when you must buy materials upfront or when the client is new. For very large projects, a smaller deposit followed by progress invoices works well.
Is a deposit the same as a retainer?
No. A deposit is a partial prepayment for a specific project. A retainer is a recurring fee that reserves ongoing availability or is drawn down against hourly work.