Advance invoices with partial payments: Booking and final settlement

Advance invoices with multiple partial payments are more common in Swiss SME operations than many realise — especially on longer projects where the customer cannot or will not pay the full advance in one go. What sounds straightforward conceals real booking traps: when do you book what? How do you keep track of which amount is still outstanding? And how does it all flow cleanly into the final invoice? This article walks you through the process step by step.

Why multiple partial payments on an advance invoice can cause problems

You issue an advance invoice for a specific amount — say CHF 5,000. Your customer initially pays only CHF 2,000, then another CHF 3,000 two weeks later. From a bookkeeping perspective, these are two payments received against a single debt. That sounds unremarkable, but in practice it leads to three typical problems:

1. Your open items list no longer balances. If your accounting software or your accountant records the first partial payment as full settlement rather than as a part-payment, the invoice appears paid — even though CHF 3,000 is still outstanding.
2. Reminders go out incorrectly. An automated dunning system might demand CHF 5,000 even though only CHF 3,000 remains due.
3. The link to the final invoice becomes unclear. When the project ends and advance payments are to be deducted, it must be clear how much was actually received — not just how much was invoiced.

Booking logic for partial payments on advance invoices

Step 1: Record the advance invoice

Book the advance invoice as a receivable, as usual:

Debit	Credit	Amount
Accounts receivable (1100)	Advance payments received (2030)	CHF 5,000

The "Advance payments received" account (often 2030 or 2300 in the SME chart of accounts, depending on structure) is a liability account — you have not yet delivered the service, so the money does not yet belong to you from an accounting perspective.

VAT note: If you are VAT-liable and invoice based on agreed fees, VAT liability arises according to your method at the time of invoicing. For further detail, consult our guide on Swiss VAT basics 2026 — rates, duties and special rules, which explains the differences between cash and accrual methods.

Step 2: Record the first partial payment

Your customer transfers CHF 2,000. You book:

Debit	Credit	Amount
Bank (1020)	Accounts receivable (1100)	CHF 2,000

The receivable drops to CHF 3,000. Your open items list must show this balance as still outstanding — check this explicitly, especially if you use software with automatic clearing.

Step 3: Record the second partial payment

When the remaining CHF 3,000 arrives:

Debit	Credit	Amount
Bank (1020)	Accounts receivable (1100)	CHF 3,000

The receivable from the advance invoice is now fully settled. The "Advance payments received" account still shows CHF 5,000 as a liability — because the service has not yet been delivered.

Step 4: Final invoice and release of the advance payment

When you deliver the service, you record it on the final invoice. Say the total project amount is CHF 12,000 (excl. VAT). You issue a final invoice for CHF 12,000, deduct the advance of CHF 5,000, and the customer owes CHF 7,000.

Booking the final invoice (total service):

Debit	Credit	Amount
Accounts receivable (1100)	Revenue (3000)	CHF 12,000

Release of the advance payment:

Debit	Credit	Amount
Advance payments received (2030)	Accounts receivable (1100)	CHF 5,000

The accounts receivable now shows CHF 7,000 due — exactly the amount the customer must transfer.

Common errors in practice

Recording each partial payment as a separate invoice

Some SMEs create a new invoice for each part-payment. This confuses customers and makes it difficult to link to the final invoice. Better: issue a single advance invoice, on which the outstanding balance after each payment is clearly visible — either via an updated payment slip or a written payment confirmation.

Booking the advance directly as revenue

This is the classic mistake among small business bookkeepers: the CHF 5,000 goes straight to a revenue account, even though the service has not been delivered. This overstates revenue — a problem that is both tax and bookkeeping related and will be caught at year-end.

QR-bill with incorrect reference amount

If you issue a QR-bill for CHF 5,000 but the payment arrives in two tranches, your bank's payment processor checks the full amount. Some e-banking systems flag a partial payment as a deviation. Clarify with your bank how partial payments on QR-bills are technically handled — or issue a separate QR-bill for each tranche covering the respective partial amount. For instructions on how QR-bills are correctly structured, see our step-by-step guide to creating a Swiss QR-bill.

No written confirmation for each partial payment

Especially with private customers, a short written confirmation per partial payment is recommended — an email suffices. This protects you if disputes later arise over the amount of advance payments made.

Practical recommendation: document the payment schedule in writing upfront

If you know from the start that a customer will pay in instalments, record this in your contract or quotation:

• Tranche 1: CHF 2,000 upon order, due by [date]
• Tranche 2: CHF 3,000 after project start, due by [date]
• Final payment: CHF 7,000 after completion, due within 30 days

A written payment schedule protects you legally and gives your dunning process clear ground rules — you know at every moment which amount is due, which is not yet due, and which is overdue.

At a glance

• Book the advance invoice as a receivable against "Advance payments received" — never directly as revenue.
• Record each partial payment individually against the open receivable and check the remaining balance.
• Release the advance payment only when you issue the final invoice and record it against revenue.
• With QR-bills: clarify partial payment handling with your bank in advance or issue separate invoices per tranche.
• Document the payment schedule in writing in your contract — this prevents misunderstandings and strengthens your dunning process.
• If you want to create advance invoices digitally with correct amounts and a QR-code, you can do so directly in the SnapBill app.