In the event industry, it is customary to ask for a deposit when selling services. This partial payment before the execution of the contract offers financial and transactional security.
What is a down payment invoice and why do we need one?
A down paymentis a portion of the final sum paid before the start of the execution of a contract.The deposit invoiceis an accounting document that shows that a down payment has been made.
According to French law, when you ask a customer for a down payment, you must issue a down payment invoice (article 289 of the General Tax Code).
Making a down payment invoice can be very useful in several cases:
- When your costs necessary to the realization of the service are high (for example the purchases of materials or the hiring of operational personnel, etc). The deposit allows you to cover these costs and start working without making a hole in your cash flow.
- To avoid unpaid bills. A deposit invoice commits you and your customer to complete the transaction. Your customer can no longer cancel without charge, he will be required to pay the deposit and the total amount of the invoice.
- The down payment invoice may also be of interest to your customer. This allows them to spread the cost and not pay a large sum at once. The deposit also reassures the client of the provider’s commitment and assures him that the transaction will be completed.
What are the mandatory mentions and how to account for the down payment invoice?
The down payment invoice must respect the same rules as a classic invoice: the compulsory mentions are the same as on any other invoice.
Also, it will be necessary to indicate the mention “Invoice of deposit”, the document will have to refer to the initial estimate “Deposit on the estimate , <reference of the Devis>, and will have to be dated of the day of its emission.The numbering shall follow the same chronological series as the other invoices.
This partial payment generated by the progress invoice will thus be accounted for in your sales.
At the time of the customer’s payment, the payment must be credited to account 4191 “Customers – Advances and deposits received on orders”.
In addition, do not forget the VAT account 4457 “Collected VAT” to be used if your down payment invoice is subject to VAT.
Use an event management software to edit your down payment invoices
You will no longer need to start from scratch, Lab Event gives you the possibility to import templates that you have previously defined. These templates can be composed of items, titles, subtotals… to prepare turnkey estimates, invoices and deposit invoices.
You will be able to create your catalog of items and you will be able to shortcut these items when you edit your financial documents.
All items can be defined with single or multiple VAT rates, markup rates, commission rates and also purchase and sales prices.
Also, in order to facilitate your follow-up of the events, you will have the possibility of visualizing the various payments on the tool.