Interim Invoice: Definition, Examples, and How to Use

An Interim Invoice is when you're requesting a partial payment, often for a partial delivery of a service or instalments on a large project. Click to learn more!

Hannah Dawson

As a small business owner, it can be incredibly useful to be more flexible in your credit and invoicing process. Interim invoices can be a great tool in allowing for that flexibility. Businesses that offer interim invoice options are allowing their customers to make smaller, more manageable payments and it ensures your business has regular revenue coming in. This is why we've compiled this short guide to what interim invoices are when they should be used, their benefits, and how to create them.

What Is An Interim Invoice?

An interim invoice, also referred to as a progress invoice or progress bill refers to an invoice of a partial amount of an order. Companies can invoice a client in regular installments for a purchase or service. This system is often applied in the case of large purchases or longer projects. These interim invoices would be based on a cost estimate that the customer has agreed to. On a larger project or a project that takes a lot of back and forth, this can be useful as you know you are not waiting until the final deliverable to get paid and your customer does not just have that one large final invoice to pay at the end.

An example of a service that may get invoices with interim bills is the building of a website - this might take a long time, so a payment schedule with interim invoices could be a good solution for both provider and client.

When Should I Use An Interim Invoice?

The situation in which to use an interim invoice will vary between different businesses and projects - but as a general rule of thumb, most smaller businesses like to have cash coming through the books regularly. If you would usually invoice at the end of a larger project, it might make sense to issue interim invoices monthly. This ensures a steady cash flow. Another scenario in which it might be useful to resort to interim invoicing is if your client is having financial difficulties. Rather than taking legal action or writing off the outstanding debt, you could try and agree on an installment plan or partial payment based on the idea of interim invoicing.

Of course, the frequency and amount must be agreed upon at the start of the project and covered in any contracts.

What Are The Benefits Of Using Interim Invoices?

There is several benefits to using interim invoices:

  • Cash Flow: Interim invoicing can help ensure a steady cash flow in your business. This means that you do not have to wait until the end of a big (and potentially resource-intensive) project to receive payment. This can help financial stability in your company. As cash flow is the backbone of keeping your business healthy this is a key argument for interim invoicing.
  • Security: Interim invoices can help improve payment security - this means you do not have to use your staff and resources while risking that there will be issues with the payment of the final invoice. Ensuring that you get a regular cash flow from a project can also help avoid having to chase late and outstanding payments.
  • Customer service: Being flexible in your payment structure can be attractive to customers. While the ultimate price point is important, showing them that you can accommodate their needs in how to pay that price can make a purchase much more attractive to them. Being flexible with your invoicing can ultimately help your company's reputation.
  • Avoid potential payment issues: If a customer is not paying their interim invoices, this may be a sign that they are having trouble. You can then enquire into this early and discuss it with the customer to figure out what the problem is and, if necessary, stop the lproject before you end up with significant amounts of bad debt.
  • Working capital: Regular cash inflow can help guarantee that you have enough cash to pay your business's expenses and working capital needs.

How Do I Create An Interim Invoice?

There is several different steps when you want to create interim invoices:

  1. Provide an estimated cost: Of course, this may change over time. Circumstances may change during a long project. Simply ensure that any changes to the total cost are agreed on in writing ahead of time. Send your client a copy of your estimate and ensure it is formerly agreed upon before commencing the project.
  2. Confirm the schedule: It is crucial to set out a schedule for the recurring invoice system from the start. If you are expecting the project to last for six months, for example, you could decide to send interim invoices every month.
  3. Sending the interim invoice: Send the interim invoice just like you would a regular invoice. If you do not send separate account statements, you might also want to include what has been paid, what is still outstanding, and projected remaining schedules.
  4. Send a final invoice: Once the project is complete, you can issue and send the final invoice. This should include an itemized list of services, the due date of payment, the amount charged, invoice number, and payment method (e.g., account details).

Interim Invoice FAQs 

  • What’s the difference between an Interim Invoice and a Standard Invoice?

An interim invoice is used where the client and the seller have agreed on multiple payments to cover the total cost of e.g., a project. This is often used if a project goes on over a longer period to ensure cash inflow for the seller, while not confronting the buyer with a large lump payment at the end of the project. A standard invoice is a simple document used for billing for a service or product.

  • What’s the difference between an Interim Invoice and a Partial Invoice?

With a partial invoice, a part of the project (the part that is being invoiced) has already been completed. With an interim invoice, the seller invoices a part of the total cost, regardless of the project being partly completed.

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