> ## Documentation Index
> Fetch the complete documentation index at: https://docs.aiinsurance.io/llms.txt
> Use this file to discover all available pages before exploring further.

# 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.

***

### How It Works

The system processes down payments as follows:

#### 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                                |

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.

   **Formula:**

   ```
   Down Payment Credit = -1 × (Down Payment distributed across invoices)
   ```

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

   ```text theme={null}
   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.

### 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

### 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.

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