Simple invoice software for UAE

Deposit Invoice in UAE

A deposit invoice is used to request a deposit from the customer. This type of invoice will generally cover partial payment for the goods to be delivered or services to be performed. However, there is no fixed universal rule so it can be any amount and is dependent on the mutual understanding and contract between the seller and buyer.

The deposit is received at the start of the work and is adjusted against the subsequent or final invoices sent to the customer.

Deposit Invoice Example

deposit invoice sample

As an example, suppose a company purchases product A with the following aspects:

Sales price AED 10,000
Initial deposit 50%
Final invoice amount to be billed 50%

With these details in mind, the company will be required to deposit AED 5,000 (AED 1,000 x 50%) before goods are delivered to them. The rest of the 50% is to be paid once goods are delivered.

Advantages and Disadvantages of Deposit Invoice

Advantages Disadvantages
It is a great way to mitigate the risk from the seller's perspective. Requesting a deposit might signal that the seller does not trust the buyer.
It is a good way to cover the initial cost of manufacturing the product. Requesting a deposit might make the business less competitive than competitors offering products at the same price without requiring an initial deposit. Hence, it is only effective in industries where the bargaining power of the supplier is higher.
Customer advances helps to enhance the working capital structure of the business. If the project gets canceled after receipt of the deposit, it is quite challenging to calculate the refund amount.
It helps to enhance the customer's commitment to the buying process. Only serious customers are expected to pay the deposit. So, non-serious customers are filtered out in the initial phase of the project. Tracking and managing deposits can be complex and challenging for small businesses with fewer resources.

Deposit Invoice Email Notification Template

Subject: Invoice # {XXX}

Hello {Name of your customer},

We are excited to proceed with your order and appreciate doing business with you. This email intends to request a deposit as per our policy to {Start the project / Deliver goods}.

We have attached the deposit invoice for your ease and peruse with the following essential attributes:
  • Invoice #: {XXX}
  • Invoice date: {DATE}
  • Invoice due date: {DATE}
  • Amount to be deposited: {AAA}

Please note that the initial deposit will be adjusted in the final invoice and this invoice does not request any additional amount other than the agreed price of the {Product / Project}.

Payment details:
{Your payment details}

If you have any questions or queries, please contact us at {Your phone number / Email address}.

Kind regards,
{Your name}
{Your position title}
{Your company name}

How to Create a Deposit Invoice

Invoicing tools for UAE: