Setting a client's advance off against progress claims

How a contractor records a client's advance or mobilisation payment and sets it off against later progress invoices, with a schedule to agree with the QS.

By Achekam · 11 October 2026 · 5 min read · For Construction businesses in South Africa, Nigeria, Kenya

On a larger job the client often pays something before a brick is laid. The contract calls it an advance payment or a mobilisation payment: money to buy materials, move plant onto site and set up the site camp. In return, the contract says how the advance is recovered, usually as a deduction from each progress payment until it is all paid back.

That arrangement is simple on paper and easy to lose track of in the books. Three or four claims in, nobody is sure how much of the advance has been recovered, and the client's quantity surveyor has a different figure from yours. This article shows a way to hold the advance in Achekam and set it off claim by claim.

Why an advance is not income on the day it arrives

An advance is paid for work you have not yet done. Until you do the work, you owe the client either the work or the money back. In accounting terms it is a liability, not income. Investopedia's explanation of deferred revenue sets out why payment received in advance for services is a liability until delivered, and how it is recognised over time.

If you post the advance straight to sales, your first month looks wonderfully profitable and every later month looks poor. Worse, the amount still to be recovered disappears from view.

Invoicing the advance, or holding the receipt on the client's account

There are two broad routes. Choose one with your accountant before the money lands.

Route one: hold the receipt on the client's account. Record the advance as a payment received from the client. Achekam records customer payments against one invoice or spread across a customer's invoices, and any amount not used is held on the customer's account. The advance therefore waits as credit in the client's name, not as income.

Route two: invoice the advance. Some contracts, and some VAT positions, call for a document when the advance is paid. Achekam does not offer pro-forma invoices, so the choice is between a full invoice for the advance and a payment request written outside the invoicing screens. A full invoice posts debtors, sales and output VAT when it is issued, which changes how the later set-off has to be booked. Your accountant should design those entries; do not improvise them claim by claim.

The rest of this article follows route one, because it keeps the advance visible as an amount still owed back in work.

Allocating part of the advance to each progress invoice

Each month, you issue a progress invoice for the work done. Issuing takes the next number in your sequence and posts it to the ledger as debtors, sales and output VAT. Then:

1. Work out the advance recovery for this claim, using the contract's rule.
2. Re-allocate that part of the advance held on the client's account to the new invoice. A receipt can be re-allocated in Achekam, so the advance moves from waiting credit to settling this claim.
3. When the client pays the rest, record that payment against the same invoice.

A worked example in words: the contract says a fixed share of each certificate repays the advance. The first progress invoice is issued for the value on the certificate. You re-allocate the agreed share of the advance to it. The invoice now shows part-paid, and the remaining balance is what the client owes in cash, which should equal the net amount on the payment certificate. When that payment arrives, the invoice is fully paid, and the credit left on the client's account is the advance still to be recovered.

What the age analysis and the client's statement show in between

Between the claim and the client's payment, the invoice is part-paid. Receivables are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals, and only the unpaid part of the invoice is ageing. The re-allocated advance is not shown as overdue, which is correct.

The server also produces a statement of account as a PDF that can be e-mailed. Send it with each claim. It shows the invoices, the payments applied and the credit still held, so the client's QS can see the advance being drawn down in your figures as well as theirs.

If a later certificate is reduced and you credit part of a progress invoice, the credit note is issued from that invoice, and any leftover credit is held for the client alongside the advance. Keep the two apart in your schedule.

Questions to settle with your accountant, including when VAT falls due

Before the advance arrives, get answers to these:

• Does your VAT system treat a payment received in advance as the moment VAT is due? The rules in South Africa, Nigeria and Kenya are not the same, and the answer decides whether route one is enough.
• Is the advance backed by an advance payment guarantee from your bank, and when does the bank's cover reduce or fall away?
• Will the advance be paid by transfer? A payment link exists only for an issued invoice, so under route one the client pays by transfer.
• How will a recovery be handled if the contract ends early, with advance still unrecovered?

A set-off schedule to agree with the client's quantity surveyor

Keep one schedule per contract and send it with every claim:

When your schedule and the QS's schedule agree, the books and the certificates will too. When a certificate comes in lower than your claim, handling a payment certificate below your claim explains what to do with the gap. Retention is a separate deduction with its own trap in credit control, covered in invoicing so retention is not chased as overdue. Hotels hold group deposits in a similar way, as group booking deposits shows.

First step

Find the advance clause in your current contract, write its recovery rule in one sentence at the top of the schedule, and fill in the rows for the claims already made.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.