Deposit vs. Down Payment

Often times deposits are confused with down payments when creating a contract in Knowify. The main difference is whether or not the value is credited back to the client over the life of the contract.

In a deposit, a client pays a fee upon signing a contract. Then over the life of the contract, the deposit is credited back over one or multiple invoices. Deposits are not considered job revenue.

Example

The contractor receives a $1,000 deposit upon signing a $5,000 contract. Then once the job is complete, the contractor sends an invoice for the full $5,000, but with a $1,000 credit applied, totalling $4,000.

A down payment is a portion of the complete contract invoiced upon signing. Once it is invoiced and paid, the contractor can only invoice for the remaining balance of the contract, and no value is credited back to the client. A down payment is considered job revenue.

Example

The contractor receives a $1,000 down payment upon signing a $5,000 contract. Then once the job is complete, the contractor sends an invoice for the remaining $4,000.