What Is an Advance Payment Invoice (Prepayment)?

An advance payment invoice (prepayment invoice) is a fiscalised invoice issued when a customer pays part or all of the amount for goods or services that have not yet been delivered. Under Croatian law it is mandatory whenever payment is received before delivery.

Typical use cases:

• Deposit/down payment – the customer pays a portion of the amount upfront as a guarantee for future delivery
• Prepayment for made-to-order goods – goods are ordered only after payment is received
• Advance for a service – the service is provided later while the payment is upfront (e.g. construction, consulting)
• Partial payment – the customer pays 30-50% upfront, the rest upon completion

Under Croatian regulations, a VAT (PDV) obligation arises upon receipt of the advance payment, so the advance invoice must contain the correct tax calculation. When delivery is completed, a final invoice is issued with the previously paid advance amount deducted.

Ways to Create an Advance Payment Invoice

Kigo offers three ways to create an advance payment invoice:

1. New Advance Invoice from the Main Menu

In the main menu open Sales → New Advance Invoice. The system automatically creates a blank invoice with a special "Advance Payment" item (service of advance type). The invoice receives an internal number and an advance designation.

On the new invoice you can:

• Change the advance amount (edit the price of the "Advance Payment" line item)
• Add a customer
• Select an employee
• Enter a note

The payment method is automatically set to Bank Transfer, but you can change it.

2. Advance Invoice from a Quote or Customer Order

Open a closed quote or customer order, click the Other Actions menu and select Create Advance Invoice.

The system then:

• Creates a new advance-type invoice
• Copies the customer from the source document
• Sets a link to the source document and shares the same internal number that connects all documents in the chain
• Adds a reference to the source document in the note (e.g. "Related to Quote: PO-00123")
• Adds an "Advance Payment" item with a default amount – edit the amount according to the agreement with the customer

3. Converting an Existing Invoice to an Advance Invoice

If you have already issued a regular invoice and later determine it should have been an advance invoice, open the invoice and click Other Actions → Convert to Advance Invoice. This option is available only for regular invoices (not already advance invoices) with a closed or reversed status.

The system will set the advance designation on that invoice without creating a new document.

What Happens Technically When an Advance Is Created?

When Kigo creates an advance invoice, the following steps happen in the background:

1. A new document is created with the type Invoice and the auxiliary label ADVANCE
2. The system searches for an item with the special "advance" type. If it does not exist, it is automatically created under the name "Advance Payment" with 25% VAT (PDV)
3. That item is added as the only line item on the invoice with a quantity of 1
4. If the advance was created from a quote/order, the following links are set:
   • Direct link – connects the advance to the source document
   • Internal number – a shared number that connects all documents in the chain (quote → advance → reversal → final invoice)
5. The invoice opens in the editor and you can adjust the advance amount, add a note, etc.

Creating the Final Invoice from an Advance

When goods/services have been delivered, a final invoice needs to be issued. This process has multiple paths:

Path A: Final Invoice from an Active (Closed) Advance

Open the advance invoice in the invoice view. At the bottom a Create Final Invoice button is displayed.

1. Click the button – a confirmation dialog opens
2. If you have multiple active employees, enter the PIN of the employee performing the action
3. The system automatically:
   • Reverses the advance invoice (creates a reversal document with negative amounts)
   • If there are multiple advances with the same internal number, reverses all closed advances in the group – including advances from the previous year
   • Creates a new invoice with the final-invoice-from-advance designation
   • If the advance was linked to a quote, copies all line items from the quote to the final invoice
   • Records in the note references to all reversed advances and their reversal documents
4. The editor opens with the new final invoice – add/edit line items and close the invoice

Path B: Final Invoice from a Reversed Advance

If the advance has already been reversed (e.g. you reversed it manually or for another reason), open the reversal document of the advance. The Create Final Invoice button will be available on the reversal document.

The system then:

• Searches for the original advance by direct link or by internal number
• If the original advance is in the previous year (archive), the system automatically searches the archive table
• Creates the final invoice using data from the original advance

Path C: Final Invoice from a Quote (new)

On a quote that has linked advance payments, a Create Final Invoice button is displayed (in archive view: Create Final Invoice in [current year]). Clicking it opens a detailed preview modal showing:

• Quote amount – the total value of the quote
• List of all advance payments – active (closed) and already reversed, with amounts
• What will be reversed – list of active advances that will be automatically reversed
• Remaining to pay – the difference between the quote and total paid advances

After confirmation (and entering the employee PIN if multiple employees exist), the system automatically reverses the active advances and creates the final invoice with all line items from the quote.

Displaying the Advance Payment on the Final Invoice

When a final invoice is created from an advance, the system automatically displays special rows at the bottom of the invoice:

• For each advance linked to the same internal number a row "Advance Payment (INVOICE-NUMBER)" is shown with a negative amount
• If the advance is from the previous year, the year is appended to the invoice number (e.g. "Advance Payment (RN-00045/2025)")
• At the end a row "Total to Pay" is shown with the amount reduced by all advance payments

Example for two advances of 500.00 EUR (one from the previous year) and a final invoice of 2,000.00 EUR:

These amounts are automatically calculated by searching all advances with the same internal number that have a Closed or Reversed status – including advances from the previous year (archive).

Multiple Advances for One Final Invoice

Kigo supports multiple advance invoices linked to the same final invoice. This is useful when a customer pays in several instalments before delivery.

How it works:

1. Create multiple advance invoices from the same quote or order – each will receive the same internal number
2. When creating the final invoice, the system searches for all advances with the same internal number that have a Closed or Reversed status – in both tables (current year and previous year archive)
3. All found advances are automatically reversed (if not already)
4. On the final invoice each advance is shown as a separate deduction row
5. References to all advances and their reversal documents are recorded in the final invoice note

Reversing an Advance Invoice

An advance invoice can be reversed in several ways:

1. Automatic Reversal (when creating the final invoice)

When you click Create Final Invoice, the system automatically reverses the advance. Manual reversal is not necessary and you should not do it before creating the final invoice.

2. Reversal as Error

If the advance invoice was issued with an incorrect amount or incorrect customer, use the option Other Actions → Reverse as Error!. This option is special because:

• The reversal note reads "REVERSAL (AS ERROR) OF: ..." instead of the regular "REVERSAL OF: ..."
• The internal number of the original advance is regenerated – this breaks the link with other documents in the chain (quote, order). This prevents the erroneous advance from affecting the future final invoice
• The option is available only on closed advance invoices and is not visible on regular invoices

3. Reversing an Advance from the Archive into the Current Year

When viewing an advance invoice in the archive view (previous year), the Other Actions menu shows two options:

• Reverse advance in [current year] – standard reversal, retains the internal number and links
• Reverse advance as error in [current year] – breaks all links with the chain

Both options create the reversal document in the current year, while the original advance in the archive receives the "Reversed" status.

Fields and Labels Specific to Advance Invoices

Advance invoices use several special fields that distinguish them from regular invoices:

The internal number (internal_number) is a shared identifier that connects all documents in the advance chain: quote, order, one or more advances, reversals and the final invoice. Thanks to this number the system can find all related documents and automatically calculate the advance amounts on the final invoice – even when documents are spread across multiple years.

The document link (parent_id_pos) enables direct linking and navigation – clicking a document number in the related documents view lets you navigate to any document in the chain.

Year-end Transition: Advance in One Year, Final Invoice in Another

A common scenario: the advance is issued in December and the final invoice is issued in January of the following year. Kigo fully supports this scenario with automatic cross-year searching.

Automatic Cross-Year Advance Search

When creating the final invoice, the system automatically searches both tables – the current year and the previous year archive – by internal number. This means:

• Advances from the previous year are automatically found and displayed in confirmation dialogs
• Each found advance carries a year label indicating its origin (e.g. RN-00045/2025)
• Reversing an advance from the previous year creates the reversal document in the current year
• The final invoice print and e-Invoice correctly display advances from both years

Creating an Advance from the Archive into the Current Year

When you are in archive view (viewing the previous year), quotes display an option Other Actions → Create Advance in [current year].

This action:

• Deactivates the archive view and returns to the current year
• Reads data from the archive document (quote from the previous year)
• Creates an advance invoice in the current year linked to the archive document
• Records a reference to the source document together with the year designation in the note (e.g. "Related to Quote: PO-00123/2025")

Final Invoice from a Quote in the Archive

On a quote in the archive view that has linked advances, a Create Final Invoice in [current year] button is displayed. The confirmation modal shows all advances from both years. The final invoice is created in the current year with the line items from the quote.

Reversing an Advance from the Archive

On an advance invoice in the archive, the options Reverse advance in [current year] and Reverse advance as error in [current year] are available in the Other Actions menu.

VAT (PDV) Calculation for Advances and Final Invoices

VAT on the advance invoice is calculated at the time the advance payment is received. The "Advance Payment" item that the system automatically creates has a 25% VAT (PDV) rate.

For the final invoice:

• The final invoice contains the total value of the delivery with the full VAT calculation
• The invoice displays deductions for each previously paid advance
• If the final invoice was created from a quote from the previous year (year-end transition), a detailed VAT calculation is automatically recorded in the note:
  • Advance amount excl. VAT
  • VAT difference between the final invoice and the advance
  • Total advance amount
  • Final amount to pay

Complete Workflow: From Quote to Final Invoice

Here is a typical scenario step by step:

1. Create a quote with a full list of line items and close it
2. On the quote click Other Actions → Create Advance Invoice
3. Edit the advance amount (e.g. 30% of the total quote) and close/fiscalise the advance
4. Repeat steps 2-3 if additional advances are needed (e.g. second instalment)
5. When goods/services have been delivered, open the quote or the advance invoice
6. Click Create Final Invoice – a modal opens with a preview of all advances, amounts to reverse and the remaining amount to pay
7. Enter the employee PIN (if required) and confirm
8. The system automatically reverses all active advances (including from the previous year) and creates the final invoice
9. The final invoice already has the line items from the quote – review and edit as needed
10. Close and fiscalise the final invoice

All documents (quote, advances, reversals, final invoice) remain linked and visible in the Related Documents tab on any document in the chain.

Year-end Transition Scenario

1. In December 2025: Create a quote and one or more advances, fiscalise them
2. Perform the year-end transition (archiving)
3. In January 2026: Open the archive, find the quote from 2025
4. If needed, create an additional advance: Other Actions → Create Advance in 2026
5. Click Create Final Invoice in 2026 on the quote – the modal shows all advances from 2025 and 2026
6. Confirm – the system reverses all active advances and creates the final invoice in 2026 with line items from the quote

Frequently Asked Questions

Can I edit an advance invoice after it has been closed?

Yes, like any other invoice you can use the Other Actions → Open and Edit option as long as the invoice has not been reversed. However, if the invoice has already been fiscalised, changing the amount requires a reversal and issuing a new advance.

What if the advance amount is wrong?

Use the Reverse as Error option on the advance invoice. This action breaks the link with the quote/order and marks the advance as erroneously issued. Then create a new advance with the correct amount.

How to handle partial delivery?

If only part of the goods has been delivered, edit the line items on the final invoice to reflect only the delivered portion. The remaining advance amount can be resolved with a new advance invoice or by agreement with the customer.

Can I create a final invoice if the total exceeds the advance?

Yes. The final invoice can have a higher total than the advance. The difference (Total to Pay) will be shown on the invoice and is the amount the customer needs to pay additionally.

What if the final amount is less than the advance?

This is also possible. In that case "Total to Pay" will be a negative amount, meaning you need to refund the difference to the customer.

Can I reverse the final invoice?

Yes, the final invoice is reversed like a regular invoice. However, keep in mind that previously reversed advances are not automatically restored to active status – create new advances if needed.

Why don't I see the "Create Advance Invoice" button?

The button is visible only on closed quotes and customer orders, and only when the archive is not active. In archive view, use the "Create Advance in [current year]" option instead.

Why don't I see the "Create Final Invoice" button on a quote?

The button is only shown on quotes that have linked advance payments. If the quote has no advances, you will see the standard "Create Invoice" button. Also check that the quote has an internal number (internal_number).

What if the advances are in the previous year but I need the final invoice in the current year?

The system automatically finds advances from both years. You can click Create Final Invoice from any advance or from the quote (including a quote in the archive) and the system will correctly process all advances from both years.