How to Collect a Downpayment From Clients in the Philippines

Most small businesses in the Philippines fund a client's job before the client pays for it. A caterer buys ingredients and books servers weeks before the event. A furniture shop orders plywood and hardware before the first cut is made. The full payment usually comes at the end, and for corporate clients, that can mean another 30 to 60 days after the work is delivered.

A downpayment is the simplest way to close part of that gap. It moves some of the cost of the work back to the person who asked for it, and it tells you early on whether the client is committed. This guide explains what a downpayment is and how it compares with a deposit or a reservation fee, how much to ask for, what to put in writing, and the most practical ways to collect one from Filipino clients.

What is a downpayment?

A downpayment is a partial payment a client makes before you start the work or deliver the goods. It is deducted from the total price, and the client pays the remaining balance later, usually on delivery or in scheduled tranches as the work progresses.

In everyday Philippine business, people often use "DP" and "deposit" to mean the same thing, and sometimes "reservation" too. They work differently, though, and the difference matters when a client cancels. Here is how the common types of upfront payment compare.

Why a downpayment matters more than the price you quote

Take a ₱200,000 fit-out job where ₱120,000 goes to materials and subcontractors in the first two weeks. Without a downpayment, you are effectively lending your client ₱120,000 for as long as the project runs, plus however long their accounts payable team takes to release the final payment. If the client cancels halfway, you are left holding materials cut to someone else's measurements.

Ask for 50% upfront and the math changes. The client's ₱100,000 now covers most of your materials, which keeps your own cash free for payroll and other jobs. A cancellation also costs you far less. Your margin on the job stays the same either way. What changes is who carries the risk while the work is in progress.

This is especially true when you sell to larger companies. Their payment terms are usually set by them, and the final payment often moves on their schedule of check runs and approvals. The downpayment is the one part of the payment that you get to set yourself, before any work begins.

How much downpayment should you ask for?

There is no legal standard amount. In practice, the right figure depends on how much of your cost hits before delivery and how easily you could recover it if the deal falls through. Common ranges among Philippine SMEs look like this:

• Events and catering: 30% to 50% to book the date, with the balance due a week or so before the event.
• Custom furniture and fabrication: 50%, because the materials are bought for one client and are hard to resell.
• Construction and fit-outs: 30% to 50% to mobilize, followed by progress billing as milestones are completed.
• Agencies and freelancers on fixed-fee projects: 50% upfront, or a split across milestones for longer engagements.
• Wholesale and B2B supply: often 50% to 100% for new buyers, moving to credit terms once a buyer has a payment track record with you.

Two other questions help you set the number. How well do you know the client? A repeat client who has always paid on time can earn a smaller downpayment than a first-time buyer you found on Facebook. And how long is the project? On a three-month job, a single downpayment at the start leaves you exposed for a long stretch, so milestone billing is usually safer.

Refundable or non-refundable?

Decide this before you quote, and write it down. A non-refundable downpayment is easiest to justify when it matches costs you have actually incurred, such as materials already ordered or a date you turned other clients away for. Many businesses use a middle ground: the downpayment becomes non-refundable once work or purchasing has started, and is refundable minus a cancellation fee before then. For high-value contracts, have a lawyer review your cancellation terms.

Put the terms in writing first

Most downpayment disputes come from terms that were only agreed verbally or on a messaging app. Before you ask for money, send a quotation or a proforma invoice that spells out the deal.

A proforma invoice is a preliminary bill. It shows the client what they will be charged and on what terms, before the sale is final. It is useful for getting a client's approval or for their internal purchase request, but it is not a BIR sales invoice. Since the Ease of Paying Taxes (EOPT) Act, the sales invoice is the main document for both goods and services, and you'll still need to issue one on the timeline your accountant advises.

Whether you call it a quotation or a proforma invoice, make sure it covers:

• The total price, the downpayment amount, and the percentage it represents
• When the downpayment is due, and what happens if it is late (for example, the date is not held or production does not start)
• Your cancellation and refund terms
• When and how the balance will be billed
• The payment methods you accept, with the exact account name the client should expect to see

That last point is easy to overlook. Clients have become wary of payment scams, and a clear account name that matches your business name makes it easier for them to pay without calling you to double-check.

How to collect a downpayment from clients

The usual process for a lot of SMEs goes like this: the client asks for payment details, you send a bank account number in a chat, the client transfers and sends a screenshot, and someone on your team opens the banking app to confirm the money arrived and figure out which client it came from. 

It works, but every step is a chance for delay, and it gets harder once you have more than a handful of clients paying at the same time.

Here are the main options, and when each one makes sense.

Bank transfer through InstaPay or PESONet

InstaPay transfers arrive in seconds, and since July 2026, InstaPay for Business lets registered businesses send up to ₱500,000 per transaction, up from ₱50,000. PESONet is often used for larger amounts, though funds arrive in batches rather than instantly [VERIFY current PESONet limits]. Both are familiar to corporate clients. The downside is reconciliation: a transfer shows up in your account with little detail, so matching it to the right client and project takes manual work. Read more about InstaPay for business.

GCash, Maya, and other e-wallets

For individual clients and smaller businesses, e-wallets are often what they have on hand. They are fast and familiar, but wallet limits can get in the way of larger downpayments [VERIFY current GCash and Maya wallet limits]. A personal GCash number also mixes business and personal money, which makes bookkeeping harder. Here's how to accept GCash payments as a business.

QR Ph

A single QR Ph code can be scanned by any participating bank or e-wallet app, so the client doesn't have to ask which wallet or bank you use. It works well in person, such as at an ocular inspection or when a client visits your shop to approve a sample. Learn how QR Ph works.

Credit and debit cards

Cards matter more than many SMEs expect. Corporate clients sometimes prefer to pay a downpayment on a company card, and individual clients paying a large amount may want to use a credit card to spread out their own cash flow. Card fees are higher than bank transfers, so some businesses build the cost into their pricing for larger jobs.

The easier option: a payment link on the invoice

You don't have to choose one method. If the downpayment request comes with a payment link, the client can pick whichever method they prefer, and you don't need to track screenshots.

With PayMongo Invoices, you can send a branded invoice with a Pay button built in. Your client can pay with GCash, Maya, GrabPay, QR Ph, or a credit or debit card, and the invoice shows as paid in your dashboard without you having to check your bank app.

Collecting the balance

The simplest approach is to treat the downpayment and the balance as two separate bills. Send the downpayment invoice when the client confirms, and send the balance invoice when you deliver or when the agreed milestone is reached. Each one has its own due date and its own record, which makes it clear at any point how much is still outstanding.

For longer projects, split the balance into milestones that match your work. A fit-out might be billed 40% to mobilize, 30% at a midpoint inspection, and 30% on turnover. An agency retainer might be billed monthly in advance. Milestone billing keeps your cash coming in at the same pace as your costs, and it gives both sides natural checkpoints to raise problems early.

If the balance comes in late, a steady reminder schedule usually works better than a single awkward phone call. For more on following up on unpaid invoices, see our guide to accounts receivable.

When a client cancels or goes quiet

If a client cancels after paying a downpayment, go back to the terms you sent. Apply your refund policy as written, list the costs you have already incurred, and send the refund (if any) through the same channel the client used to pay. Keep the paper trail, from the approved quotation to proof of payment and refund.

If a client confirms but never pays the downpayment, don't start the work. Set a deadline in your quotation after which the date or slot is released, and follow it. Clients tend to take the downpayment more seriously once they see that you do.

Send downpayment invoices your clients can pay in a minute

PayMongo Invoices lets you bill the downpayment and the balance as separate invoices, each with your logo, itemized line items, and a due date. Clients pay online in one tap. If an invoice goes unpaid, PayMongo emails reminders before and after the due date until it's settled, so you don't have to chase anyone yourself. For retainers, you can set invoices to repeat weekly, monthly, or yearly.

Sending invoices is free. You only pay the standard transaction fee when your client pays, and you can choose to pass that fee on to the client instead.

PayMongo invoices are payment requests, so you will still issue your BIR-registered sales invoice for tax purposes.

Get started with PayMongo Invoices and send your first downpayment invoice today.

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