Definition
A payment on account is a partial payment made before the service is fully delivered. The recipient still owes the corresponding work – if they don't deliver, the client can reclaim the payment as unjust enrichment. For bookkeeping purposes, it's a liability, not revenue.
Payment on account vs. deposit vs. progress payment
- Payment on account: the umbrella term; any payment made before the overall service is due.
- Deposit: usually a flat percentage paid when the contract is signed.
- Progress invoice: tied to a specific, completed stage of work, with the character of a regular invoice.
Why clients hesitate – and what works instead
Clients don't like paying before anything has been delivered. The alternative: secure the budget with the payment partner Stripe instead of with the service provider. The client pays before the project starts, but the money is only released to the service provider once the corresponding work is approved. That's exactly what Stipme does – per milestone, with a 72-hour auto-release.