Last updated November 6, 2026
General information, not tax or legal advice. The rules depend on your country and your situation, so check anything with a tax or legal consequence with your accountant.
To record a partial payment, leave the invoice as issued, enter the amount and date against it, and tell the customer the balance still due. A partial payment needs no new invoice or credit note. You only issue more invoices when instalments were agreed before the work was billed.
Do you need a new invoice for a partial payment?
No, a partial payment against an existing invoice needs no new invoice, because you have already billed the full amount. A second invoice for the balance would count the same sale twice in your revenue and your VAT. What you do depends on why the amount is short.
| What happened | What to do | New document? |
|---|---|---|
| Customer paid less and still owes the rest | Record the payment, ask for the balance | None |
| Customer asks to pay an issued invoice in instalments | Confirm the plan in writing, record each payment | None |
| You agreed instalments before billing | Invoice each stage, as in deposit and final payment | One invoice per stage |
| You agreed to reduce the price | Record the payment, then credit the difference | A credit note |
| Customer disputes part of the work | Record what arrived, settle the dispute first | Only if a reduction is agreed |
| A bank charge or withholding tax was deducted | Decide who bears it, see invoice reconciliation | Depends on the cause |
How do you invoice in instalments?
Invoicing in instalments means splitting the price before the customer owes it, and there are two ways to do that. You can issue one invoice per stage, or one invoice for the whole amount with a schedule printed on it:
Payment schedule: €1,200.00 by 3 February 2026, €900.00 by 20 February 2026, €1,500.00 by 18 March 2026. Total €3,600.00.
The single invoice is less paperwork, but on normal VAT accounting the VAT on the whole invoice usually falls due in the period you issue it. Separate stage invoices spread the VAT along with the cash.
If an agreed instalment is missed, the EU Late Payment Directive calculates interest and compensation only on the overdue amounts, not the whole debt (Article 5).
How do you record a partial payment?
Recording a partial payment takes the invoice number, the amount received, the date it reached your account and where it came from. Use the bank date, not the day you got round to entering it, or your books won't match your bank statement.
Here's an invented example. A studio issues an invoice for €3,000 plus 20% VAT, €3,600 in total, due on 31 January 2026.
| Date | Entry | Received | Balance due | VAT share of payment |
|---|---|---|---|---|
| 12 Jan | INV-2026-0063 issued | €3,600 | ||
| 3 Feb | First payment | €1,200 | €2,400 | €200 |
| 20 Feb | Second payment | €900 | €1,500 | €150 |
| 18 Mar | Third payment | €1,500 | €0 | €250 |
| Total | €3,600 | €600 |
The last column only matters on cash accounting, which the next section explains.
Does a part payment change the VAT you owe?
Usually no, a part payment doesn't change the VAT you owe under normal invoice-based accounting. VAT on the whole invoice is due for the period of its tax point, whatever has been paid so far. HMRC's Notice 700 puts it flatly: you can't delay accounting for VAT until you have received payment (paragraph 14.2.2).
On cash accounting, VAT follows the money. HMRC's Notice 731 treats a part payment as VAT-inclusive and works out the share as payment ÷ invoice total × VAT (paragraph 5.7 and section 8). In the example, €1,200 ÷ €3,600 × €600 gives €200. Other countries with a cash-based scheme set their own rules, so check yours.
If the rest never arrives, that's a separate question. See write-down vs write-off.
What should you send the customer after a part payment?
After a part payment, send a short note confirming the amount received and asking for the balance by a date. It stops both of you working from different figures.
Thank you for your payment of €1,200.00 on 3 February against invoice INV-2026-0063. The balance of €2,400.00 was due on 31 January. Please let me know the date we can expect it.
If you've agreed a plan, confirm it so there's something to point to:
As agreed, the remaining €2,400.00 on invoice INV-2026-0063 will be paid as €900.00 by 20 February and €1,500.00 by 18 March. Please reply to confirm. If a payment is missed, the whole balance falls due at once.
A smaller payment marked "in full and final settlement" is a different matter. Answer it in writing before you treat it as routine, because in some places banking it without objection can be argued to close the debt. Take advice if the sum is large.
Which invoice does a payment belong to?
A payment belongs to whichever invoice the customer says it's for, so read the remittance first. If there's none, ask, and offer oldest-first as the default. Take an invented €2,000 from a customer who owes €1,500 on one invoice and €1,200 on another: oldest-first clears the first and leaves €700 on the second. UK cash accounting requires payments to be allocated in the order invoices were issued (Notice 731, paragraph 5.7).
The mistakes people make with part payments
- Invoicing the balance. That bills the sale twice, in your revenue and on your VAT return.
- Voiding the original and reissuing it for the balance. The history is now wrong, and so is the VAT.
- Marking it paid to clear the list. The debt disappears from your view and stays real.
- Chasing the original total. A customer who has paid half and gets a reminder for all of it will stop trusting your figures. The reminder sequence should always quote the balance.
Recording partial payments in ERPFlow
On an issued invoice, Record payment opens a panel with the balance already filled in. Change it to what actually arrived, set the date, and add a note if you like. There's no payment-method field, so a note such as "bank transfer" is where that goes. An invoice takes any number of payments.
The rest happens by itself. The invoice reads Partially paid, the list shows what's still due under the total, and the Partially paid filter finds them all. The PDF prints Paid and Amount due, and a Send payment reminder on an overdue one asks for the amount due rather than the total. It becomes Paid when the payments cover the total. A customer's Analytics tab and the dashboard's revenue count the part already paid.
Two things to watch. Mark as paid records whatever is still due as one payment dated today, so use Record payment for money that arrived last week. A payment entered by mistake can be deleted from the Payments card, and its amount goes back onto the balance.
An amount above the balance shows as Overpaid, and Record refund records money you send back.
ERPFlow has no bank feed, online card payment or automatic collection, so every payment is typed in, and a lump sum covering two invoices is entered as one payment on each. There's no instalment schedule either. Write an agreed plan in Notes before you issue the invoice, or keep it in a comment on the invoice afterwards. ERPFlow also has no credit note document, so an agreed price reduction needs the route described in the credit note guide.