In one line
Money paid before the work is done or the goods are delivered.
Also called money up front, payment in advance, or prepayment.
What it means in practice
An advance payment covers you for what you spend before the job starts. On a trade job it usually takes the form of a deposit against a quote; on ongoing work it is more often a retainer that is drawn down.
Whatever it is called, put on the quote what it covers, when it is due, and what happens to it if the job is cancelled. Then issue a receipt the day it lands.
Covered in full in the guide to deposit invoices.
Example. A $6,000 advance on a $15,000 kitchen covers the cabinets and countertop ordered before the first day on site.
Where it shows up on the paperwork
On a quote it is a named line with its own due date. On an invoice it is the whole amount, with a note that the balance follows on completion. On the final invoice it appears as an amount already received, above the balance due.
What goes wrong
- Taking the money without writing down what it covers, which turns a cancellation into an argument.
- Starting work before it clears. A payment that has been promised is not a payment that has arrived.
- Recording it as revenue on the day it lands when the work has not been done. It is money held against work you owe.
The tools for this
Related terms
- DepositPart of the price paid before the work starts, credited against the final balance.
- RetainerMoney paid in advance to hold your availability or to draw against for ongoing work.
- Proforma invoiceA document that shows what the final invoice will contain, sent before the work or the shipment.
Common questions
Is an advance payment the same as a deposit?
On a trade job, yes in practice: the deposit is the usual form an advance takes. The words diverge on ongoing work, where an advance held against future hours is a retainer.
How much can I ask for up front?
Enough to cover what you spend before the first day, unless your state caps it. Home improvement contracts with homeowners are capped in several states, and California limits the down payment to $1,000 or 10% of the price, whichever is less.