How do I invoice clients for partial payments in the US?

Understanding partial payments and why they matter

Partial payments are exactly what they sound like: a client pays you in multiple installments instead of paying the full invoice amount all at once. In the United States, partial payments are common across consulting, creative services, construction, home services, software development, marketing retainers, and many other industries. They help clients manage cash flow and reduce risk, while helping you get paid earlier and more predictably.

But partial payments can also create confusion if your invoices don’t clearly show what’s due now, what’s been paid, what remains, and how the payment schedule works. A clean partial-payment invoicing process protects your revenue, keeps your books accurate, and prevents misunderstandings that can lead to disputes. The good news is that once you set up a repeatable method, partial payments become easy to handle and even easier for clients to follow.

This guide walks through practical ways to invoice for partial payments in the US, what to include on each invoice, how to structure deposits and progress billing, how to handle tax and accounting considerations at a high level, and how to keep everything consistent using a modern invoicing workflow.

Common types of partial payment arrangements

Before you create invoices, it helps to identify which partial-payment pattern fits your work. Different patterns require slightly different wording and invoice structure.

Deposit (upfront) + final payment

This is one of the most common setups: the client pays a deposit to reserve your time or start the work, and then pays the balance when the work is delivered or completed. Typical examples include photographers, designers, event services, and freelancers. Deposits are often expressed as a percentage (for example, 30% upfront) or a flat amount (for example, $1,000 to begin).

Milestone payments

Milestone billing is used when a project has clear stages. Each stage triggers an invoice for a portion of the total. For example: 25% at kickoff, 25% after initial draft, 25% after revisions, 25% at final delivery. This method is popular in software, branding, and larger service engagements because it ties payment to progress.

Progress billing (percentage-of-completion)

Progress billing is especially common in construction and long-term projects. You invoice based on work completed during a time period or as a percentage of overall completion. The invoice often includes a summary of prior billings, current billing, and remaining balance. Clients like this approach because it maps to real progress, and you like it because it keeps cash flow consistent.

Installment plan (fixed recurring payments)

An installment plan splits a total amount into equal payments due on a schedule (weekly, biweekly, monthly). This is often used for coaching, memberships with setup fees, training programs, and some productized services. It’s simple for clients because they know exactly what will be charged and when.

Retainers and “draw down” billing

Retainers can look like partial payments. A client prepays a recurring amount, and you invoice against it by showing time or deliverables drawn from the retainer. If your retainer is “non-refundable” or “earned upon receipt,” wording matters, and you should ensure your contract matches your invoicing method.

Set the agreement first: your invoice starts with your terms

In the US, invoices aren’t just payment requests—they’re also documentation that supports what was agreed. The smoother partial payments go, the more likely you’ll have: (1) a written agreement, and (2) invoices that mirror that agreement.

Include partial payment terms in writing

Whether you use a formal contract, a proposal, or a statement of work, include the basics:

1) Total project price or an estimate range (and what changes it).
2) The payment structure (deposit, milestones, installments, progress billing).
3) The due dates or triggers (e.g., “due upon receipt,” “due Net 15,” “due at milestone acceptance”).
4) Whether work pauses for late payment.
5) Any late fees, interest, or collection costs (if you use them).
6) Refund policy (especially for deposits).

Define what counts as “paid”

Clarify whether the payment is considered received when the client initiates it or when funds clear. This is especially important for ACH transfers and checks. You can keep it simple: “Payments are considered received when funds are successfully processed.”

Spell out how changes affect partial payments

Partial payments can become messy when the scope changes. If the client adds work mid-project, decide whether you’ll adjust the remaining milestone amounts, create an additional invoice, or issue a change order. The goal is to avoid a situation where the original milestones no longer reflect the updated total.

What to include on an invoice that supports partial payments

A partial-payment invoice needs to do more than list services and a total. It must help the client instantly understand where they are in the payment journey. The following items are especially important in the US context:

Clear invoice identifiers

Use an invoice number that’s unique and sequential. Include an issue date and a due date. For milestone and progress billing, add a reference like “Milestone 2 of 4” or “Progress Billing – January 2026.” Consistent identifiers help clients’ accounts payable teams process payments correctly.

Line item detail that matches the agreement

If your agreement says “Brand identity package – $8,000 total,” your invoice should reflect that, even if you’re only collecting a portion today. You can list the full package on the invoice and then apply a “Deposit received” or “Prior payments” line that reduces the amount due. Alternatively, you can invoice only the installment portion as its own line item. Both approaches can work; the best choice depends on your industry and how you want your records to look.

A “payments and balance” summary

For partial payments, include a short summary near the totals area:

Total: $8,000
Payments received: $2,000
Balance remaining: $6,000
Amount due this invoice: $2,000

This type of summary eliminates the most common client question: “Wait—how much do I still owe?”

Payment instructions and accepted methods

In the US, clients may pay by credit card, ACH, check, wire, or wallet-based methods. Your invoice should clearly show how they can pay and where the payment should go. If you accept checks, include the payee name and mailing address. If you accept ACH or bank transfer, show your preferred instructions (or provide them securely). If you accept cards, make it easy for clients by including a pay-now option.

Late payment policy and next steps

Be professional and direct. A short line like “A late fee of X% may apply after Y days” can reduce chasing. If you prefer a softer approach, say: “If you anticipate a delay, please reach out so we can coordinate.”

Three practical ways to invoice partial payments

There isn’t only one “correct” way. The key is consistency. Below are three approaches that work well in the US, with guidance on when to use each.

Method 1: Invoice the full amount and record partial payments against it

With this approach, you create one invoice for the entire project total. As the client pays in parts, you record each payment, and the invoice balance decreases. This method is straightforward when you want a single invoice reference for the whole job.

Best for: Deposit + final payment projects, or clients who prefer one invoice number.
Pros: One invoice to track; shows complete scope and total value.
Cons: Clients may not understand what to pay now unless you communicate clearly; some AP systems prefer separate invoices for each installment.

To make it crystal clear, add a note: “Please pay $2,000 deposit now. Remaining $6,000 due upon final delivery.” Then show “Amount due now” prominently.

Method 2: Separate invoices for each milestone or installment

Here you create multiple invoices, each one representing a specific phase or installment. Each invoice is “complete” on its own, with its own due date and amount due. You can still reference the overall project in the description.

Best for: Milestone billing, installment plans, larger organizations with strict AP processes.
Pros: Easy for clients to process; each invoice has a single amount due; clean payment reminders.
Cons: More invoices to manage; you must ensure totals across invoices match the agreement.

For example, if a project is $10,000 split into four milestones, you can issue invoices of $2,500 each, labeled “Milestone 1/4,” “Milestone 2/4,” and so on. Each invoice should reference the same project name and include any applicable purchase order number if the client uses one.

Method 3: Progress billing with a “schedule of values” and prior billing summary

This approach resembles what many contractors use: you maintain a breakdown of work categories (a schedule of values), and each progress invoice shows prior billed amounts, current billed amounts, and remaining amounts by category. Even if your business isn’t construction, progress summaries can be useful for long-running projects.

Best for: Long projects, variable scope, work that’s easiest to measure by completion percentage.
Pros: Highly transparent; aligns with project tracking; reduces disputes.
Cons: Requires more detail; may be overkill for small jobs.

How to invoice a deposit (upfront partial payment) the right way

Deposits are common, but they are also where misunderstandings happen. The invoice should help the client understand what the deposit does and what happens next.

Option A: Deposit invoice only

Create an invoice with a single line item such as “Project deposit (30% to begin work).” The invoice total equals the deposit amount. After payment, you start work and later issue a final invoice for the remaining balance.

This is simple and clean. Just ensure your agreement explains that the deposit is part of the total (not an extra fee), and whether it is refundable.

Option B: Full project shown, deposit applied as amount due now

Create an invoice that lists the full project amount, then adds a line like “Deposit due now (30%).” You can show the total project price for context, but make the “Amount due” equal to the deposit. This can reduce client confusion about total cost, especially when they want documentation of the full amount for internal approval.

Communicate when the remaining balance is due

Always include a clear trigger: “Balance due upon final delivery,” “Balance due Net 15 after completion,” or “Balance due at go-live.” If you want to reduce delays, align your trigger with something you control, such as “upon delivery of final files,” rather than “after client review,” which can drag on.

How to invoice milestone payments without confusion

Milestone payments work best when milestones are objective and clearly named. Your invoices should use the same milestone names as your contract or proposal.

Use milestone titles that describe deliverables

Instead of “Phase 2,” consider “Phase 2 – Wireframes delivered” or “Milestone 2 – First draft delivered.” Clients understand what they are paying for, and your invoice becomes a project record.

Make milestones payable at delivery or approval—pick one

Invoicing milestones “on approval” can create payment delays if approvals lag. Invoicing “on delivery” may be better for cash flow but requires confidence in your process. Many businesses choose delivery-based milestones with a short review window for feedback, while still requiring payment according to the agreed schedule.

Handle partial payments within a milestone

Sometimes clients want to partially pay a milestone invoice. If that’s acceptable, state your minimum to continue. For example: “Work continues when milestone invoice is paid in full” or “Work continues when 80% is received.” If you allow partial payment, record each payment and keep the invoice balance visible.

How to set up installment plans in a way clients actually follow

Installment plans can boost conversions because they reduce upfront cost for clients. But to keep them smooth, treat the plan like a schedule rather than a casual arrangement.

Define the schedule and stick to it

Spell out the due dates. For example: “$500 due on the 1st of each month for 6 months.” Avoid vague timing like “monthly” without a specific day, because clients interpret that differently.

Decide how you’ll handle missed payments

Installment plans need a clear policy. Will you pause access to deliverables? Will you charge a late fee? Will the remaining balance become due after a certain number of missed payments? Choose a policy you can enforce and keep it consistent.

Make the invoices predictable

Each installment invoice should look almost identical except for the invoice number and dates. This reduces friction for the client’s payment process and makes it easier to reconcile on both sides.

Recording partial payments correctly to avoid accounting headaches

How you record partial payments matters for accurate bookkeeping and for avoiding confusion during tax season. While the exact handling can vary based on your accounting method and the nature of your work, there are a few practical principles that help most US small businesses stay organized.

Always record the payment with date, amount, and method

For every partial payment, capture the payment date, amount, method (card, ACH, check), and any transaction reference. This is useful for disputes and for reconciliation.

Keep “amount due” and “balance” visible

A partial payment should reduce the remaining balance on the invoice (or project). Clients should never have to do math to understand what’s left.

Be consistent about deposits: liability vs. earned revenue

Some businesses treat deposits as prepayments until work is performed, then recognize revenue as it’s earned. Others treat certain retainers as earned upon receipt based on their agreement and local rules. The right approach depends on your business type, how you deliver work, and how your accounting is set up. If you’re uncertain, a CPA can help you choose a method that matches your situation.

Sales tax and partial payments: what to watch for

Sales tax in the US can be complicated because rules vary by state, and not every service is taxable. If you sell taxable goods or taxable services, partial payments raise a common question: when do you apply sales tax?

General principle

In many situations, sales tax is calculated on the taxable portion of what you’re invoicing. That could mean charging tax per invoice (per milestone or installment) or charging it on the final invoice, depending on how the transaction is structured and what your state requires.

Keep it consistent and transparent

If you charge sales tax on a deposit invoice, show it clearly. If you charge sales tax only when the final product is delivered, make sure your final invoice includes the full taxable base and reflects prior payments so the client can see why the tax appears then.

When in doubt, align invoices with your tax reporting method

Some businesses remit sales tax based on when money is received, while others remit based on when invoices are issued. The correct approach can vary by jurisdiction and your filing setup. If sales tax applies to your work, it’s worth confirming your state’s expectations so you don’t under-collect or over-collect.

How to phrase partial payment terms on invoices

Clear wording prevents most problems. Here are practical phrasing ideas you can adapt to your invoices and payment notes.

Deposit language

“Deposit due to begin work. This deposit will be applied toward the total project cost.”

“Deposit is required to reserve project start date. Remaining balance due upon completion.”

Milestone language

“Milestone 2 of 4: Initial draft delivered. Payment due upon receipt.”

“This invoice covers the next project milestone as outlined in the proposal.”

Progress billing language

“Progress billing for work completed during the period shown. Prior payments applied. Remaining balance shown below.”

Installment language

“Installment 3 of 6. Payment due on the date listed. Thank you for paying on schedule.”

Late payment and pause language

“Work may be paused on overdue invoices until the account is current.”

“Late payments may result in rescheduled delivery timelines.”

Handling partial refunds, credits, and adjustments

Real projects change. Clients may overpay, you may issue a goodwill discount, or the scope may shrink. Partial payments can still be clean if you use the right documentation.

Use credits for invoice-level adjustments

If you need to reduce what a client owes after partial payments have begun, a credit is often clearer than editing past invoices. A credit creates an audit trail that explains why the balance changed.

Document refunds carefully

If you refund part of a payment, record the refund as its own transaction with the date and method. Tie it to the relevant invoice or project. Clients appreciate seeing the original payment, the refund, and the updated balance clearly.

Be explicit about what happens to the payment schedule

If the total price changes, clarify whether future installments change or whether the final invoice changes. For example: “A $500 credit will be applied to the final invoice” or “Future installments reduced from $500 to $400 starting next month.”

What clients’ accounts payable teams need from you

If you invoice businesses, partial payments often get routed through an accounts payable (AP) process. AP teams care about consistency and matching documentation.

Include purchase order (PO) numbers when provided

If your client uses POs, put the PO number on every related invoice. A missing PO number is a common reason invoices get stuck.

Keep vendor and payment details consistent

Use the same business name, address, and payment instructions each time. If you change bank details, notify the client directly and clearly to avoid delays and fraud concerns.

Provide a short remittance note

A simple line like “Please include invoice number on payment” helps with matching and speeds up reconciliation on both sides.

A simple workflow for invoicing partial payments using invoice24

When you have an invoicing system that supports partial payments well, your workflow becomes repeatable. The goal is to create the invoice, accept partial payments, automatically track what’s been paid, and keep the remaining balance visible for both you and the client.

Step 1: Create the client and project context

Start by saving the client details (name, billing address, email). If you track work by project, label the project consistently across invoices so everything ties together cleanly.

Step 2: Choose your partial-payment structure

Decide whether you’re issuing one invoice with multiple payments recorded against it, or multiple invoices for milestones/installments. Either way works as long as your invoice structure matches your agreement.

Step 3: Build the invoice with clear line items

Add line items that match your scope. If you’re collecting only a portion today, make that visible as the “Amount due” while still showing the context (total project or milestone details). If sales tax applies to your items, apply it consistently to the taxable lines.

Step 4: Send the invoice with the right message

Include a short note: what this invoice is for, what’s due now, and what comes next. Keep it friendly and direct. For example: “This is the deposit invoice to begin the project. Once paid, we’ll schedule kickoff. The remaining balance will be invoiced at final delivery.”

Step 5: Accept and record partial payments

As the client pays, record the payment amount and method. The invoice balance should automatically update so you always know what’s outstanding.

Step 6: Follow up based on the remaining balance

If the invoice is partially paid, send reminders that reference the remaining balance, not the original total. Clients respond better to clear, current numbers.

Partial payments and payment processing fees

In the US, card payments often include processing fees. Partial payments can increase fees if clients pay multiple times by card, because each payment may incur a separate fee. Decide how you want to handle this and communicate it in advance.

Absorb the fees vs. pass them through

Some businesses build fees into their pricing and keep payments frictionless. Others add a convenience fee or encourage ACH to reduce costs. If you pass fees through, be sure your approach is allowed where you operate and is communicated clearly so clients aren’t surprised.

Encourage lower-fee methods for multi-payment plans

If clients are paying in multiple installments, ACH can reduce total costs for both sides. Make sure your invoice offers convenient options so clients choose what works best for them.

Partial payments for hourly work and time-based billing

Hourly work can be invoiced with partial payments in a couple of ways, especially when projects span weeks or months.

Weekly or biweekly invoicing

Instead of one large invoice, issue regular invoices for time worked in a period. This is technically not “partial payment” of one invoice, but it serves the same purpose: clients pay in smaller pieces, and you reduce your risk.

Retainer + overage invoicing

A client pays a retainer amount upfront each month, and you invoice against it. If hours exceed the retainer, you invoice the overage. The key is keeping reporting clear: show hours, rates, and what portion was covered by the retainer.

Dispute prevention: the small things that prevent big problems

Partial payments can reduce disputes because clients pay as they go, but only if your invoices stay clear.

Always tie payment to a deliverable or time period

Even if you’re using a single invoice with multiple payments, your notes should explain why a payment is due now. Clients are less likely to delay payments when they understand the reason.

Use consistent naming and numbering

If you call something “Milestone 1” in your proposal, don’t call it “Phase A” on the invoice. Consistency reduces confusion, especially when multiple stakeholders are involved.

Keep communication in one thread when possible

Send invoices from a consistent email address and keep replies together. When a client asks “How much do we owe now?” you can point to the invoice balance and the payment summary.

Examples of partial payment invoice scenarios

Here are a few realistic scenarios to show how the pieces fit together. Use these as templates for your own process.

Scenario 1: Freelancer with a 50% deposit

You charge $4,000 for a project. You require 50% to start and 50% on delivery. You can either issue one invoice for $4,000 and request a $2,000 payment now, or issue a deposit invoice for $2,000 and later a final invoice for $2,000. In both cases, clearly state the trigger for the second payment.

Scenario 2: Agency with three milestones

Total is $15,000. Milestones: kickoff ($5,000), first draft ($5,000), final delivery ($5,000). Create three invoices labeled Milestone 1/3, 2/3, 3/3 with clear deliverable descriptions. Each invoice has its own due date and reminder schedule.

Scenario 3: Contractor with progress billing

You invoice monthly based on work completed. Each invoice includes: contract total, prior billings, current billing, retainage (if applicable), and remaining balance. Clients can see exactly what they’re paying for and how it affects the total.

Final checklist for invoicing partial payments in the US

Use this checklist every time you set up partial payments:

1) Confirm the payment structure in writing (deposit, milestones, installments, progress).
2) Match invoice wording and milestone names to the agreement.
3) Include invoice number, issue date, due date, and clear payment instructions.
4) Show totals clearly: total amount, payments received, remaining balance, amount due now.
5) Record each partial payment with date, amount, and method.
6) Use credits/refunds with documentation instead of silently changing history.
7) Keep sales tax handling consistent with your taxable items and reporting approach.
8) Communicate what happens next after each payment (start work, deliver next stage, schedule next milestone).

Making partial payments feel effortless for your clients

Clients don’t mind partial payments when they’re straightforward. They mind confusion, surprise fees, unclear balances, and inconsistent terms. If your invoices clearly state what’s due now, what’s already been paid, what remains, and what the next step is, partial payments become a smooth routine instead of a recurring headache.

Whether you’re collecting a deposit, billing by milestones, or running an installment plan, the key is a simple, consistent structure: clear terms, clear invoice summaries, and accurate payment tracking. With a modern invoicing workflow in invoice24, you can create professional invoices, accept partial payments, keep balances accurate, and help clients pay you on time—without making them decode your billing.