Down Payment Receipt

A down payment is a cash transaction made by the customer to the company during the early stages as part of the full payment. It is only a percentage of the whole payment for the costly purchases or services, which is later deducted from the whole payment.

The down payment basically serves as security money, which in some cases is refundable if the deals break and non-refundable in some instances as well. But in most cases, after the down payment, the deal is fulfilled and the rest of the amount is paid after it. Some examples in which down payment is done are:

  • House Purchase: As per each country’s laws the down payment for purchasing a house varies, for example in the US 20% amount of the whole house, is paid ahead as a down payment.
  • Vehicle Purchase: Customers usually also have to pay a down payment for the purchase of vehicles or automobiles. This down payment is determined during the individual deal between the seller and buyer or through the bank if involved. 

What is a Down Payment Receipt?

A down payment receipt is sent by the seller to the buyer, requesting the amount decided between two parties as a down payment. During record-keeping, the total value of the sold item or service is not changed rather the amount from the total amount is checked as paid as soon as a down payment is received. The down payment receipt can be created generally or as a sales/purchase order as well. The deposit money is clearly stated on this receipt as a down payment.

How to Receipt a Down Payment?

There are certain prerequisites to decide the amount of down payment among the two parties and after that, the process for invoicing the down payment is carried out. Both of these components are further explained below.

  • Prerequisites for Invoicing Down Payment: Firstly, the seller or vendor forms a contract with the buyer or client, stating the exact amount and percentage of the down payment from the whole amount. The laws according to which this amount has been decided, any third party (e.g. investor, bank) authorization, and the due date for a down payment is also stated in this contract. Secondly, the contract is then added in the records and the item or service is considered booked for the respective client.
  • Process for Invoicing a Down Payment: Ahead of invoicing, the prerequisites are completed and kept forward. On the basis of the preliminary contract, the down payment receipt is generated. It is more like a general receipt but states the down payment amount rather than the complete bill. The major information included in a down payment receipt comprises of the company’s credentials, the client’s credentials, receipt ID and header (stating it a down payment receipt), the items purchased or the services availed against which the down payment is being made, down payment amount, applicable taxes (if any), due date and payment method (cash, check, etc.).

    Please note that any errors in stating the amount of down payment on the receipt do not change the actual terms and conditions decided about it on the preliminary contract. That is one of the major reasons why the prerequisites, in this case, are so significant.
  • Post Invoicing Down Payment: After the down payment has been receipt the said item/service is booked in the name of the client. After this receipt is cleared, the said amount is deducted from the total amount and is not included in the last receipt of the contract. Rather, it is stated separately that this amount of money was previously paid as the down payment on whichever date.
Security deposit receipt template for word