How to Send a Partial Invoice in QuickBooks

When you’re managing long-term projects or have an agreement based on milestone payments, sending a single large invoice at the end can pinch your cash flow. You need to bill as work is completed, but how do you do that without creating a mess in your books? Sending a partial invoice in QuickBooks is the answer. This guide will walk you through the two best methods to create and send partial invoices, so you can choose the right one for your business and keep your A/R in order.

Why Send a Partial Invoice?

Partial invoicing, often called progress invoicing, isn’t just about getting paid sooner—it's a strategic way to manage project finances and client relationships. For CPAs and finance teams, understanding these methods is key to advising clients, especially those in service, construction, or creative industries. Here are the common scenarios where partial invoicing is the best approach:

• Long-Term Projects: For jobs that span several months or even years, invoicing in stages ensures a steady cash flow to cover ongoing costs like labor and materials. It prevents you from financing the entire project out of pocket.
• Milestone-Based Billing: Many project agreements link payments to specific deliverables. You might invoice 25% after the initial design approval, another 40% after the development phase, and the final 35% upon project launch. Partial invoices make this easy to execute.
• Upfront Deposits: Requiring a deposit before work begins is a common best practice. It secures the client's commitment and provides initial capital to start the project. A partial invoice is the formal document for requesting this upfront payment.
• Large-Scale Orders: If a client places a large order for products that will be delivered in multiple shipments, you can invoice for each shipment separately instead of waiting for the entire order to be fulfilled.

By using partial invoices, you create a transparent and predictable payment schedule that benefits both you and your client. They can manage their budget more effectively, and you can maintain a healthier financial position throughout the project lifecycle.

Method 1: Using QuickBooks' Progress Invoicing Feature

The most robust and systematic way to handle partial billing is by using the built-in Progress Invoicing feature in QuickBooks Online. This method connects your invoices directly to an initial estimate, providing a clear, trackable trail from a project's quote to its final payment. It’s the recommended approach for any business that regularly bills for projects in stages.

Step 1: Turn On Progress Invoicing in Your Settings

Before you can use this feature, you must activate it. It's a one-time setup that unlocks the capability across your QuickBooks account.

1. Navigate to the Gear icon (⚙️) in the top right corner and select Account and settings.
2. Click on the Sales tab on the left-hand menu.
3. Find the section titled Progress Invoicing. Click on it to expand the options.
4. Check the box next to "Create multiple partial invoices from a single estimate."
5. Click Save and then select Done.

Now, QuickBooks is configured to let you create partial invoices directly from any estimate you create.

Step 2: Create a Detailed Estimate

The entire progress invoicing workflow begins with a detailed estimate. This document acts as the master record for the project, laying out the total scope and cost. Success with this method depends on creating a well-structured estimate.

To create one, go to + New and select Estimate. When filling it out, don't just put one line item called "Project Work." Instead, break the project down into the distinct phases or deliverables you plan to bill against. For example:

• Line 1: Project Discovery & Planning - $2,000
• Line 2: Phase 1: UX/UI Design Mockups - $5,000
• Line 3: Phase 2: Web Development & Integrations - $10,000
• Line 4: Phase 3: Content Loading & QA - $3,000

This level of detail gives you the flexibility to invoice specifically for "Phase 1" when it's complete. Once you're done, save the estimate and send it to your client for approval.

Step 3: Generate Your First Partial Invoice from the Estimate

Once the client approves the estimate, you can create your first partial invoice. Open the approved estimate in QuickBooks. At the top of the screen, you will now see a "Create invoice" button. When you click it, a pop-up window will appear asking, "How much do you want to invoice?"

You have a few choices:

• Invoice for a percentage of the entire estimate: This is perfect for collecting a standard deposit, like 50% upfront. You would simply enter "50" in the "% of total" field.
• Invoice for a percentage of each line item: Similar to the above, but applied on a line-by-line basis.
• Invoice a custom amount for each line: This is the most powerful option for milestone billing. It allows you to enter the specific amount you want to bill for each line. For example, you could leave all lines at $0 and only enter the full $5,000 for "Phase 1: UX/UI Design Mockups" to bill for that completed stage.

After you make your selection, click Create Invoice. QuickBooks will automatically generate an invoice with the specified amounts. The invoice will clearly show which items are being billed, and it will also reference the original estimate number. All you need to do is review it and send it to your client.

Step 4: Tracking Progress and Creating Subsequent Invoices

This is where the power of progress invoicing shines. When you return to the original estimate, you’ll see it has been updated. It now shows the total estimate amount, the amount already invoiced, and the remaining balance.

To create the next partial invoice, you simply repeat the process: open the estimate, click Create invoice, and choose what to bill for the next phase. QuickBooks keeps track of what has already been charged, so you can't accidentally bill for the same milestone twice. For the final invoice, you can select the "remaining total of all lines" to quickly close out the project billing.

Method 2: Manually Creating Separate Invoices (The Ad-Hoc Approach)

What if you didn't create an estimate, or you just need a quick-and-dirty way to bill for a deposit? The manual method works well for simpler scenarios. It involves creating separate, standard invoices for each payment, using descriptive fields to tie everything together.

Creating Your Manual Partial Invoices

This approach treats each partial payment as a distinct transaction. While less automated, it’s highly flexible.

For the First Invoice (e.g., a Deposit):

1. Go to + New and select Invoice.
2. Fill in the client information as usual.
3. In the Product/Service section, add the relevant service.
4. In the Description field, be extremely clear. For example: "50% upfront deposit for Website Redesign Project. Total project cost is $20,000."
5. Adjust the Amount to the partial payment due (e.g., $10,000).
6. Save and send the invoice.

For Subsequent or Final Invoices:

1. Create another brand new invoice by going to + New > Invoice.
2. This time, your description should provide context. For example: "Final payment for Website Redesign Project. Total project cost: $20,000. Less deposit paid on Invoice #1045: ($10,000). Balance due."
3. Enter the remaining amount (e.g., $10,000) in the Amount field.
4. Save and send.

The key to this method is using the description fields to create your own paper trail. It's up to you to manually calculate and track the remaining balances.

Best Practices for Partial Invoicing

Regardless of the method you choose, following a few best practices will help you avoid miscommunications and payment delays.

• Communicate in Advance: Your project proposal or engagement letter should clearly state the payment schedule, including when each partial invoice will be sent and what the due dates are. Surprising a client with an unexpected invoice is a recipe for a strained relationship.
• Use Descriptive Line Items: Whether you're using an estimate or manual invoices, clear descriptions are vital. "Milestone 2 Completion: Development Phase" is much better than simply "Services." This helps the client understand exactly what they are paying for.
• Reference the Original Project: Always include the project name or estimate number on every partial invoice. The progress invoicing feature in QuickBooks does this for you automatically, which is a major benefit.
• Monitor Your Accounts Receivable: Keep a close eye on your A/R aging reports. Since projects are contingent on timely payments, you need to follow up promptly if a partial payment is late.

Final Thoughts

For structured, milestone-based work, the official Progress Invoicing feature in QuickBooks is undoubtedly the superior method, offering automation and clear reporting. For simpler needs like a one-time deposit where no formal estimate exists, manually creating descriptive invoices is a perfectly viable and fast alternative.

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