Prepaid Invoices
A prepaid invoice is an invoice created for a payment that has already been received. Unlike regular invoices — where you send the invoice first and receive payment later — prepaid invoices document transactions that are already settled. They serve as receipts or formal records of completed payments.
docs101 supports prepaid invoices natively. Select the "Already Paid" payment term, choose the payment method, and the invoice is finalized directly as "Paid". No workarounds or manual status changes needed.
When to Use Prepaid Invoices
Prepaid invoices are the right choice whenever payment arrives before the invoice is created:
- SaaS subscriptions — Your customer pays monthly or annually via Stripe, PayPal, or another payment processor. You create a prepaid invoice after the charge to provide a formal receipt.
- E-commerce orders — A customer pays by credit card at checkout. The prepaid invoice documents the transaction for both parties.
- Advance payments — A customer transfers funds before work begins. The prepaid invoice confirms receipt of the advance.
- Retainers — A client pays a retainer fee upfront. The prepaid invoice serves as proof of payment.
- Point-of-sale transactions — A customer pays in cash or by card at the time of service. The prepaid invoice is issued after the fact.
How Prepaid Invoices Work in docs101
Status Flow
Regular invoices follow the path Draft → Sent → Paid — you create, send, and then wait for payment. Prepaid invoices reverse the last two steps:
Draft → Paid → Sent
- Draft: You create the invoice, add line items, and configure payment details as usual
- Paid: When you finalize the invoice, docs101 detects the "Already Paid" payment term and sets the status directly to "Paid", skipping "Open" entirely
- Sent: You send the invoice via email as a receipt. The status changes to "Sent", which is the final state — meaning the invoice is both paid and delivered
Payment Details on the Invoice
When you create a prepaid invoice, you specify:
| Field | Description | Example |
|---|---|---|
| Payment Method | How the customer paid | Credit Card, PayPal, Bank Transfer |
| Paid Date | When the payment was received | 2026-04-08 |
| Reference | Optional transaction identifier | ch_3abc123, TXN-2026-0408 |
These details appear in the payment text on the invoice PDF. For example: "Paid in full via Credit Card on 08 Apr 2026."
ZUGFeRD Compliance
Prepaid invoices are fully ZUGFeRD/Factur-X compliant. The embedded XML includes the correct Payment Means Type Code based on the selected payment method (e.g., code 48 for credit card instead of the default 58 for bank transfer). This ensures automated invoice processing systems can correctly identify the payment method.
Prepaid vs. Regular Invoices
| Aspect | Regular Invoice | Prepaid Invoice |
|---|---|---|
| When to use | Payment expected after invoicing | Payment already received |
| Status flow | Draft → Sent → Paid | Draft → Paid → Sent |
| Payment term | Net 7, Net 30, Immediate, etc. | Already Paid |
| Finalized as | Open (awaiting send) | Paid (awaiting send as receipt) |
| Email purpose | Request for payment | Receipt / confirmation |
| Due date | Calculated from terms | Same as invoice date |
| Overdue tracking | Yes — appears in overdue dashboard | No — already paid at creation |
Prepaid Invoices vs. Proforma Invoices
A prepaid invoice is not the same as a proforma invoice. A proforma invoice is a preliminary document sent before a sale — it is not a legally binding invoice and does not record a completed transaction. A prepaid invoice, on the other hand, is a full, legally valid invoice that documents a payment that has already been made.
Why This Matters for Your Business
Proper documentation of prepaid transactions is essential for:
- Tax compliance — Every payment you receive needs a corresponding invoice for your tax records, regardless of when the payment was made
- Accounting accuracy — Prepaid invoices ensure your books reflect the actual payment date and method, not just the invoice creation date
- Customer transparency — Sending a formal invoice as receipt gives your customers the documentation they need for their own accounting
- Audit readiness — Complete invoice records with payment details make audits smoother and faster
Reference Links
- Create & Send Invoice — Step-by-step guide including prepaid invoice creation
- Payment Terms — Configure the "Already Paid" payment term
- Track Payments — Understanding the prepaid status lifecycle
- ZUGFeRD Explained — How docs101 generates compliant e-invoices