Down Payment Invoices

How Down Payments Appear on Invoices

When a policy includes a down payment and installments, each invoice separates the Down Payment, Down Payment Credit, and Premium line items.
This ensures transparency in accounting and accurate allocation of the upfront payment across all future invoices.

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How It Works

Here’s what happens under the hood:

1. Down Payment
   The amount charged upfront at the start of the policy term.
   Appears as a positive line item (for example, +$1,620) on the first invoice.

2. Down Payment Credit
   The offset applied evenly across all invoices, including the first one.
   Appears as a negative line item (for example, –$135) on each invoice.
   This ensures the total of all credits equals the full down payment amount.

   Example:
   If the down payment is $1,620 and there are 12 monthly invoices:

   Down Payment Credit = -$135 × 12 = -$1,620
   

3. Premium
   The actual premium amount due for that billing period.
   This line item is separate so accounting can clearly distinguish between what’s been paid upfront and what’s owed later.

Example Breakdown

Line Item	Amount	Description
Down Payment	+$1,620	Charged upfront at policy start
Down Payment Credit	–$135	Offset applied to each monthly invoice (12 × $135 =$1,620 total)
Total Premium	+$750	Premium due for this invoice
Total Due	$2,235	Amount due for this billing period

Why It Looks This Way

Although this layout may look unusual, it’s intentional.
This breakdown allows accounting and billing systems to:

• Clearly show the upfront amount collected
• Track how that amount is credited over time
• Maintain accurate financial records for installment-based policies

Future updates to the billing module (as part of the Premium Billing Refactor) will simplify how down payments and credits appear on invoices.

Summary Formula

Down Payment Credit = -1 × (Down Payment ÷ Number of Invoices)

This formula ensures the total of all invoice credits equals the original down payment.

Example Scenario (Full Policy)

Let’s say a policy’s annual premium is $10,620. The insured chooses to pay$1,620 upfront and the rest over 12 monthly installments.

Term	Line Item	Amount	Notes
Month 1	Down Payment	+$1,620	Charged at policy start
Month 1–12	Down Payment Credit	–$135 × 12	Offsets each monthly premium
Each Month	Premium	+$750	Regular monthly premium
—	Total Down Payment Credits	–$1,620	Matches total upfront payment

After all invoices are billed, the net total billed premium equals the full policy premium.

Together, these ensure the total billed equals the full policy premium while maintaining a clear audit trail.