# Introduction - Advance Invoices

An advance invoice bills a customer before the work is done or the goods are supplied.

**Video coming soon:** Taking a deposit, holding it as a liability, and drawing it down.

It collects money against a balance you hold on their behalf, and that balance is then drawn down by real invoices as you deliver. Retainers, deposits and prepayments all work this way.

![The Advance Invoices screen. A table lists advances with columns for Date, Advance Invoice number, Reference Number, Customer, Status, Amount, Balance and Created At. Each row shows a Draft status with Balance equal to Amount.](https://www.sorviai.com/help/advance-invoices/advance-invoice-list.png)

*Balance is the part still held. It falls as real invoices draw the advance down.*

## Why advances are different

Money taken in advance is not revenue. You owe the customer either goods or a refund, so it sits as a liability until you earn it. That is the whole reason this document exists separately from an ordinary invoice, which recognises revenue immediately.

1. **Advance invoice**: You ask for the deposit
2. **Payment**: Money arrives, held as a balance
3. **Real invoice**: Work delivered and billed
4. **Apply advance**: Balance drawn down

> **Warning:**
>
> **Do not use a normal invoice for a deposit**
>
> Billing a deposit on an ordinary invoice recognises revenue you have not earned. It overstates income in the period and leaves you nothing to draw down against later.

## What the balance means

| State | Meaning | On the balance sheet |
| --- | --- | --- |
| Paid, unapplied | You hold their money and owe them delivery | Liability |
| Partly applied | Some earned, some still owed | Liability, reduced |
| Fully applied | All earned as revenue | Cleared |
| Refunded | Money returned before it was earned | Cleared |

The customer record shows the advance balance still held. That figure is a liability, so it should be watched at period end as carefully as any receivable.

## Advance against credit note

Both sit on a customer as money in your favour, and they are not interchangeable. An advance is money they paid you before you earned it. A credit note is value you have given back after overcharging. They post to different accounts and mean opposite things about who was wrong.