B2B advance payment invoices: when to use them, how they work and what to do if your customer doesn't pay

What is an advance payment invoice in B2B?

An advance payment invoice is an invoice used to charge another business part of the total price, either as a fixed amount or a percentage, in advance. It looks like a regular invoice, but the difference lies in the timing and the amount: you are not yet invoicing the full price, but an agreed advance payment.

The main difference compared to a pro forma invoice is its purpose. A pro forma invoice is informative. An advance payment invoice actually requests payment and must therefore be issued correctly.

Advance payment invoice, regular invoice or pro forma invoice?

In B2B, you should always agree on the advance payment beforehand in your quotation or contract. Not as a formality, but because that document may later be your only proof that the customer agreed.

So what is a pro forma invoice?

A pro forma invoice is not an official invoice, but a sample invoice. You send it in advance so your customer can see exactly what they will be paying before anything becomes official.

It is mainly used in three situations:

• The customer needs a document to obtain internal approval. Larger companies often only create a purchase order or payment instruction once they have a document showing the amounts and VAT.
• For exports outside the EU, where customs requires a document stating the value of the goods before shipment.
• When you request payment in advance but do not yet want to or cannot issue an official invoice.

The difference compared to an advance payment invoice lies in the consequences. A pro forma invoice does not receive a number from your official invoice sequence, is not recorded in your accounts and does not allow your customer to deduct VAT. An advance payment invoice does all of these things.

When should you use an advance payment invoice?

An advance payment makes sense whenever you incur costs or take on risks before the work has been fully completed:

• Long-term projects in construction, IT, consultancy or creative services.
• High purchasing or material costs that you do not want to finance entirely yourself.
• Reservations and planned capacity, for example for events, production or specialised services.
• Protection against late cancellations or customers withdrawing from a project.
• More predictable cash flow, without having to wait for the final invoice.

An advance payment works best as part of a clear commercial agreement: what percentage is payable, when payment is due and how it will be deducted from the final invoice.

What information must an advance payment invoice contain?

In practice, the same basic requirements apply as for a regular invoice. A poorly prepared advance payment invoice presents a real risk in B2B, as your customer is more likely to raise questions about VAT deductions, accounting and subsequent settlement.

Include at least the following:

• Your own company details: official name, address, company registration number and VAT number.
• Your business customer's details, including the correct company name, address and VAT number.
• An invoice date and a unique invoice number that fits into your numbering sequence.
• A clear indication that the invoice concerns an advance payment or deposit, either in the title or description.
• A sufficiently detailed description of the goods or services covered by the advance payment, referring to the quotation or agreement.
• The advance payment amount, either as a fixed amount or a percentage of the total price.
• The VAT rate, VAT amount and totals excluding and including VAT, unless an exemption or reverse charge applies.
• The due date, payment instructions and your bank account number. A due date is strongly recommended because clear payment terms help avoid disputes.
• The delivery date, or the date the advance payment was received where relevant.
• Your payment terms or a reference to your general terms and conditions.
• The correct language and, where required, the appropriate electronic invoicing format and channel.

Do not make the description too short. Simply writing "Advance payment" is too vague. A better example would be: "30% advance payment on quotation OFF-2026-014 for the supply and installation of office lighting." This makes it clear to your customer what the payment relates to and allows you to see immediately how it should be deducted later.

This is not unnecessary administrative detail. If the invoice ever needs to be recovered, that description can make the difference between a clear case and a dispute.

Should an advance payment invoice include VAT?

The question is not whether the payment is an advance, but whether the underlying supply of goods or services is subject to VAT. If the transaction is taxable, you would normally also charge VAT on the advance payment invoice.

There are exceptions, such as VAT-exempt transactions or situations where the reverse charge mechanism applies, including certain cross-border transactions. In those cases, you use the wording required for the relevant arrangement rather than a standard VAT line.

If you are unsure, particularly with international transactions or sector-specific rules, check with your accountant. Applying the wrong VAT treatment to an advance payment almost always leads to corrections on the final invoice.

How do you issue an advance payment invoice correctly?

1. Agree on the advance payment beforehand. Specify in your quotation or contract which amount or percentage must be paid in advance and when. This is the most important step, and the one most often overlooked.
2. Use a clear title. Include "Advance payment invoice" or "Deposit" on the document itself.
3. Describe the goods or services clearly. Refer to the quotation and specify what the advance payment covers.
4. State the correct amount and VAT. Indicate whether the advance is a percentage or a fixed amount, and show the VAT and totals correctly.
5. Include a clear due date. Without a due date, you have no basis for following up on payment.
6. Deduct the advance payment from the final invoice. Show the total value of the order and subtract the advance payment already made.

If you regularly work with advance payments, use a standard template. This reduces errors and makes things clearer for both your customer and your accounting department.

A short example

Advance payment invoice 2026-014

Description: 30% advance payment on quotation OFF-2026-014 for custom software development

Amount excluding VAT: €3,000.00

VAT 21%: €630.00

Total amount payable: €3,630.00

Due date: 14 days after the invoice date

Note: This advance payment will be deducted from the final invoice.

What if your advance payment invoice remains unpaid?

Follow up quickly and systematically

1. Send a clear reminder referring to the invoice, the due date and the original agreement.
2. If you receive no response, send a formal notice of default with a specific deadline and an explanation of what action you will take afterwards. If your customer requests a payment extension, make a deliberate decision about whether to accept it and record the new agreement in writing.
3. Gather your supporting documents. Quotation, purchase order, emails and general terms and conditions. This is particularly important for an advance payment invoice: you must be able to demonstrate that your customer agreed to the advance payment beforehand. If they later claim that no advance payment was ever agreed upon, your invoice becomes disputed and falls outside the RUD procedure.
4. Decide internally whether to continue delivery. If your terms allow it, failure to pay the advance may be a reason to withhold delivery or suspend the work.

How Unpaid can help with an undisputed advance payment invoice

If the claim concerns an undisputed B2B debt, Unpaid can initiate legal recovery through the RUD procedure, the Belgian procedure for recovering undisputed debts between businesses.