Advance and deposit: giving or receiving money up front without dispute
AmanaFi team · Updated · 1 min read
When money is given or received up front, whether a deposit on a job or an advance to a person, the most important thing is to say in writing what it is, what it is for and what happens if the project does not go ahead.
Deposit, advance, earnest money: name it right
Words matter because they determine each party's rights.
- Deposit: a partial payment counted against the final price.
- Advance on pay or works: a sum paid before the service, to be deducted later.
- Earnest money with a forfeiture clause: kept if the buyer withdraws, with views differing across schools.
What to write down
Note the amount, date, purpose, delivery or repayment date, and what happens to the sum if the project is cancelled. If the advance is a loan to a person, state the schedule and say it is interest-free.
Track the advance
Keep a receipt, record repayments or services rendered and compare the balance with what was planned. In AmanaFi, the Advances section lets you track the person, amount, agreed date and payments, in one or several instalments.
Frequently asked
Is a deposit always refundable?
It depends on what was agreed and the clause provided. Without a clear clause, it is prudent to consider it refundable if the project does not go ahead. In a dispute, consult a qualified person.
Put it into practice with AmanaFi
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