What is a standard deposit percentage?

Most industries use 25-50% as a deposit. Higher-value or more customized projects often require 50%. Lower-risk or smaller projects may use 25%.

How do I show the deposit on the final invoice?

Add a line item showing the previously paid deposit as a negative amount (credit). The invoice total then reflects only the remaining balance due.

Is the deposit refundable?

This depends on your terms. Common approaches: fully refundable before work begins, partially refundable during the project, non-refundable after a certain point. Define this in your contract.

Can I collect multiple deposits for a large project?

Yes. For large projects, collect an initial deposit, a mid-project payment, and a final payment. This is essentially milestone billing with a deposit structure.

How do I handle deposit invoicing in my accounting?

Record the deposit as a liability (unearned revenue) when received. As work is completed and invoiced, move the deposit amount from the liability to revenue.

Recurring Billing: Deposit Billing

Deposit billing collects an upfront payment (typically 25-50% of the total) before work begins, with the remaining balance billed at completion or through progress payments during the project.

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How Deposit Billing Works

The first invoice is the deposit — a percentage of the total project or engagement value. Subsequent invoices are sent at agreed milestones or upon completion, each deducting the deposit from the total owed.

Who Uses Deposit Billing?

Custom project work (web design, development, creative)

Event planning and production

Construction and home improvement

Wedding and portrait photography

Any high-value service where work begins before full payment

Pros & Cons of Deposit Billing

Advantages

+ Secures client commitment before work begins
+ Provides immediate cash to cover project startup costs
+ Reduces the risk of non-payment after work is completed
+ Signals serious intent from the client

Considerations

- Higher barrier to engagement — some clients resist deposits
- Requires tracking deposit amounts against final invoices
- Refund complications if a project is cancelled after deposit payment
- May need to hold deposit funds separately for accounting purposes

Example Deposit Billing Invoice

Here is what a deposit billing recurring invoice typically looks like.

Item	Description	Amount
Website Redesign — Deposit	50% upfront deposit on total project value of $12,000	$6,000.00
Project Setup & Discovery	Requirements gathering, stakeholder interviews, project plan	Included
Rush Delivery Fee	20% premium for expedited 6-week timeline	$2,400.00

Deposit Billing Best Practices

Collect deposits before starting any work — no exceptions for "trusted" clients.

Clearly state the deposit amount and what it covers on the invoice.

Show the deposit as a payment on the final invoice so the remaining balance is clear.

Include refund terms in your contract — what percentage is refundable and under what conditions.

Use a standard deposit percentage (25-50%) based on project size and industry norms.

Send the deposit invoice immediately after the contract is signed while client momentum is high.

Common Deposit Billing Mistakes to Avoid

Starting work before the deposit is paid — this defeats the purpose of requiring a deposit.

Not referencing the deposit on subsequent invoices, causing confusion about the remaining balance.

Setting the deposit too low to cover your startup costs.

Failing to document refund policies before collecting the deposit.

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Deposit Billing FAQ

: Most industries use 25-50% as a deposit. Higher-value or more customized projects often require 50%. Lower-risk or smaller projects may use 25%.
: Add a line item showing the previously paid deposit as a negative amount (credit). The invoice total then reflects only the remaining balance due.
: This depends on your terms. Common approaches: fully refundable before work begins, partially refundable during the project, non-refundable after a certain point. Define this in your contract.
: Yes. For large projects, collect an initial deposit, a mid-project payment, and a final payment. This is essentially milestone billing with a deposit structure.
: Record the deposit as a liability (unearned revenue) when received. As work is completed and invoiced, move the deposit amount from the liability to revenue.

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