This is likely a novice question and (hopefully) easy to answer.
I'm a web & software designer/developer and using Xero to manage finances. With new contracts I require a deposit of 30% of the estimated total. Once I receive payment I will begin work. I bill clients monthly, and often the first bill won't exceed the amount of the deposit.
I'd like to know how most of you handle client deposits like this. My bookkeeper suggested creating a standard invoice for the initial deposit and setting the Item Code to "Deposit". Then once it's paid I would void this invoice and create a credit note for the same amount that I then apply toward future invoices.
Not sure if this is the best way to do it? Besides, I've already marked the deposit invoice as PAID and don't believe I can now go and void or delete it in Xero after it's been paid.
Suggestions on best practices?