Clients & Profits FAQs

Q. What is Clients & Profits' definition of a retainer?

Retainers allow an agency to bill a client before actually incurring any costs. Retainers are not monthly fees for services that will be billed repeatedly, but rather a prepayment for services that will eventually be billed. These eventual billings can be from any of a client's job tickets or even miscellaneous billings. Clients & Profits treats this prepayment as a liability in the General Ledger.

Q. How do I set up a retainer for a client?

A retainer schedule can be added for a client. A schedule has up to twelve future retainer billings but does not actually create a billing. It sets up the information used on the invoice. Once that schedule has been met, it is cleared to make way for a new schedule. To add a client retainer schedule, choose View > Clients and find the client. Click on the retainer button from the toolbar or choose Edit > edit > retainer schedule.

Q. How do I add a retainer billing?

Choose Accounting > Accounts Receivable. From the Edit menu, choose add new invoice > retainer billing. Enter the client's code and press tab. From the client's schedule, select which period(s) to bill. Click the "bill these" checkbox for each period you wish to bill. These lines are added to the billing. When finished click save.

Q. How do I account for retainers in the General Ledger?

A retainer is not income. It is a liability and should be its own General Ledger liability account. This account is credited when a retainer billing is created and the Accounts Receivable account is debited.

Q. Do retainers affect income?

No. A retainer is a liability to the agency. Income is effected only when a billing is created for a service performed for the client.

Q. What's the difference between a retainer and an advance billing?

An advance billing is limited to a particular job ticket, is based on that job's estimate, and is applied only to that job's billings. A retainer is much more flexible as it can be applied to any A/R invoice created for a client regardless of the job number, as well as a client's miscellaneous or finance charge billings. The only limitation is the retainer is applied to only the client for whom the retainer was created. Both advances and retainers are treated as a liability, not income; this means they appear on your Balance Sheet as a short-term debt to a client (because you'll potentially have to give the money back if the job is canceled).

Q. What's the difference between an unused retainer and an unpaid retainer?

An unused retainer is the balance of the retainer that has not been applied to previous billings. An unpaid retainer is a retainer billing that is unpaid by the client.

Q. How do I know if a retainer billing has been paid by the client?

The Client Retainer Aging lists all of the unpaid retainer invoices for the clients. Choose Snapshots > Client Account Aging. In the client aging reports window select Retainer Aging. Also in the client file, client's retainer schedule shows the unpaid balance of their retainer billings. To review which individual retainer invoices are unpaid, the retainer aging is necessary.

Q. Can I use retainers for recurring income billings or to bill a monthly time retainer fee?

No. Retainers are used to setup a client deposit, a liability. To bill recurring income, use miscellaneous billing.

Q. Should the payment of a retainer invoice be entered as a retainer payment?

No, a retainer invoice is an Account Receivable invoice that shows a balance due and is on the client aging as an outstanding invoice. The Retainer account is updated when the invoice is posted so it's not necessary to effect the Retainer liability account again. The payment is applied to the retainer invoice in the same manner as applying a payment to any outstanding client invoice. To record the client payment of the retainer billing, choose Accounting > Client payments. From the menu choose Edit > add client payment. In the Add client payment window select payment type Payment.

Q. How can I record a retainer before starting work on a job for a client?

The client's retainer balance is updated when a retainer billing is posted or when a retainer payment is added. It shows as the current retainer balance in a client's retainer screen. Until the client payment is applied to that retainer billing, the unpaid retainers' balance in the client retainer screen shows the amount outstanding.

Q. How should I enter money that a client sends to us without our having invoiced them first?

When a client sends money without having been invoiced, that money can be added to the client's retainer account. Choose Accounting > client payments. From the Edit menu, choose add client payment. Select the payment type as retainer/deposit/advance. The payment can then be added and saved without applying it to an Accounts Receivable invoice. Once posted, this money is available to apply to a client's unposted invoices.

Q. How do I apply a retainer payment to a current invoice?

A retainer is applied to unposted invoices only. With the unposted invoice on the screen, choose Edit > edit > apply retainers. The apply retainer window shows the client's current retainer balance, the total charges on the invoice, less the amount of the retainer to be applied to this invoice, the ending balance due (if any) on the invoice, and the ending retainer balance. The dgl account is the liability account that is credited when the retainer is added and is the default account number. It is also helpful to enter a memo such as "less retainer applied" in the area provided as this memo prints on the completed invoice.

Q. How can I apply a retainer from one client to another client; for example, two divisions of the same company?

A client retainer is client specific and cannot be split between two or more clients. However, to "transfer" a client's retainer balance from one client to another do this: add a negative retainer payment to the client who has the balance. Add a positive retainer payment to the other client. Choose Accounting > client payments. From the edit menu, choose add client payment > Retainer/Deposit/Advance. Add the amount as a negative number. Add the client payment to the other client as a positive number. The positive and negative payments net to zero and offset one another.

Q. How do I refund the unused part of a retainer?

A client's retainer balance cannot be effected by issuing a check. Therefore the refund is a two-step process involving reducing the client retainer balance and issuing the check. A negative client retainer payment is entered to reduce the balance by the amount to be refunded. (Choose Accounting > client payments. From the Edit menu, choose add client payment. Add the amount as a negative number. Change the dgl account to a miscellaneous account. To issue the refund check, choose Accounting > checkbook. From the Edit menu, choose write check > overhead expense. Change the dgl to the same miscellaneous account used in the negative client payment and credit the checking account.) The negative debit entered by the client payment offsets the debit entered on the check.

Q. How can I apply a client's retainer to old invoices that have already been posted in prior periods without having to unpost the invoices?

The amount from the client's retainer account balance is adjusted with a negative client retainer payment. Do this by adding a client payment and selecting Retainer/Deposit/Advance as the payment type. Enter the Retainer liability account number as the cgl account. Enter a negative amount equal to the amount to reduce the client's retainer balance. Change the dgl to a miscellaneous account. This negative retainer payment reduces the client's retainer balance and decreases the account balance in the Retainer liability account.

The outstanding invoices are paid by adding a client payment. This is the same amount, but as a positive amount, that reduced the client retainer account balance. Change the dgl to the miscellaneous account. Apply the payment to the invoices.

The negative debit to the miscellaneous account entered by the negative client retainer payment offsets the payment entered to pay the old invoices.