Retainer invoices can be a great way of getting pre-paid for work and tracking those billable hours once you begin the work. It is standard practice in the legal world and we are trying to bring it to the masses. Your client in this situation could be an IT company instead of a law firm. The client is called Big IT Company and they are utilizing your skills for a certain period of time or in this case, whenever the hours are exhausted for the current project. A project can assist of billable entries for one or many clients. In this example, we will use Bob from the illustration above as the sub-contractor for Big IT Company. Bob the sub-contractor creates a Project also known as a Time sheet called Big IT Company - 10/17. 10/17 is in reference to the month and year the project was created.
NOTE: Do not forget to include the date in the project name. You will hopefully have more than one project. The project name example is "Big IT Company - 10/17". Going forward, Bob may have another project in January 2018 with Big IT Company and he would therefore call it "Big IT Company - 01/18" Save this post for future retainer invoices!
ProTip! Do not skip ahead through at any point of this post. You will aggravate Big IT Company because you have missed a step or two!! Lots of illustrations are offered after the written directions. It helps if you have dual screens.
The project has a budget of $250, also known as a "Total Project Cost" for your potential billable time. Bob's rate per hour is $25hr. At the rate of $25hr, Bob has a total of ten hours before $250 budget has been exceeded.
Summary ---> View picture illustration to the right
Project Name: Big IT Company -
Description: 10 hoursBudget Type: Total Project Cost --> $250
Billing Method: Based on project hours
Rate per hour: $25hr
Billable Period on Timesheet (the green section)
The Retainer Invoice will contain the project name for Big IT Company to associate Bob's timesheet with the retainer invoice. Bob's retainer invoice was paid as Big IT Company has noted on the illustration prior to Bob logging time on his timesheet for project Big IT Company - 10/17.
Timesheet Completed (Orange section on above illustration)
Bob needs to send an invoice (separate from a retainer invoice) once Bob completes his time sheet. The invoice is a receipt of work completed from the exhausted timesheet.
PLEASE NOTE: THIS IS A VERY QUICK SUMMARY OF HOW TO CREATE A RETAINER INVOICE ABOVE. SKIP PAST "GET GOING!" SECTION IF YOU ALREADY HAVE CONFIGURED OR CUSTOMIZED YOUR INVOICING SYSTEM. PLEASE SKIP AHEAD TO "Time Sheet and Retainer Invoice Creation and Submission" SECTION FURTHER DOWN THE BLOG POST.
Be your own Bob the subcontractor and get paid from the Big IT Company!
- Place this shortcut below on your desktop. https://www.zoho.com/invoice/login/
2. Signup for free Zoho Invoice if you have not done so already. Utilize your own DBA or Name for creating an organization to do business with your clients.
For example, John would setup his own DBA like John Inc if he subcontracts for TechNerdsIT.com.
ProTip! - The Zoho Invoice support "chat" team can be utilized and is highly recommended if you are stuck trying to figure out how to create retainer invoices.
We want you to send your client a Retainer Invoice after creating a time-sheet. We have failed this blog post if you did not accomplish this.
Enabling Retainer Invoice and Client Portal Features
You have to enable retainer features in "settings" and you must setup the portal too under "contacts" and below "other details" tab. The portal provides clients access to invoices and time sheets for your clients. In Zoho invoice, click on the Setting “gear” icon on the right and go to “preferences” to activate the "retainer invoice" feature under "select the modules you would like to enable" and click save at the bottom. The "portal" feature is enabled under every contact, client, and or customer you create in Zoho Invoice. Further portal details can be found below.
ProTip! Make sure you input the invoicing email address
Showing Clients your TimeSheets and Invoices in the Portal
Within preferences, click on BRANDING and go to Portal Settings for viewing Time Sheet and Invoices. It is the middle tab. First copy the portal URL for distribution (email) to your clients within the Portal Settings like the example below.
Portal URL: https://invoice.zoho.com/portal/business_or_consultant_name
Again, please email the portal URL to your client and copy all the settings below from the picture under portal settings except portal name. The portal name is your DBA.
This will allow the client to access the Time Sheets and Invoices in the portal once the following items displayed are checked off and saved from the illustration below.
- Check mark everything but "enable customer review for my services"
Create your First Contact or Client
You will need this information completed under "contacts" for you to create a time sheet and send a retainer invoice. Please enable portal for your client to view your time sheet while under contacts.
Add the Project Name to Your Invoice - Don't Forget!!!
We also need “project” checked marked in the header section. Then we will know what project belongs to what retainer.
Please go to Settings -> Templates -> Retainer Invoices -> Edit
Please go to Settings -> Templates -> Invoices -> Edit
Again, check mark "project" in the "header" section. The "header" section is on the top left of the page. Scroll down once in the "header" section. Don't forget to do the same for the "invoices" template.
Time Sheet and Retainer Invoice Creation and Submission
- The Time Sheet
Let's create your first time sheet to again include the project name . The project name includes the DBA of your client you are working for and the date you started. ie. OfficeAntics - 1805.
Please back out of settings to go to the main panel if you haven't done so already. Select Time Sheet from side panel and click on “new project”. Input “company name" of the client you're performing services for – package name if you have one – and Year Month under "Project Name". So the project name will include 1805 if today's date is 5/28/18.
Example: "OfficeAntics - 1805"
The description is block of hours you are having the client prepay for your services. Select customer name, the billing method is “based on project hours” and the budget type is “total project cost” ie 10 hours x 25hr = $250
New Project - Example
Description - 10 hours
Billing Method - Based on Project Hours
Budget Type - Total Project Cost
2) Add Task Name
The time sheet tab needs “tasks” created as something generic like “task1” in the overview section of the time sheet. In the example below, let's say Big IT company (the company you are subcontracted to) has Burger King, Lens Crafters, and Jenny Craig as clients. "task1" would be an inappropriate name because you are working with multiple clients as a subcontractor for Big IT Company. In this case add the DBA as the task name and or place task1 as a placeholder name until you become familiar with their client's names...
Example Task DBA:
- Burger King
- Lens Crafters
- Jenny Craig
Then click on Burger King task if you assisted them that day along with a ticket number if you have a help desk system.
3) Create Retainer Invoice
Once you have customized the time sheet, go to the top right corner of your new Time Sheet, select “New transaction”, and create "retainer invoice". The default for the "project invoice information" should be sufficient.
Copy and Paste - "Description"
Copy and paste below; and adjust rate accordingly.
"$150 in prepaid hours. When your account dips below $30, we will send you an email asking for replenishment or you will be billed at our standard hourly rate if you exceed the allotted prepaid hour’s amount."
or whatever your rate is...
"$1250 in prepaid hours. When your account dips below $250, we will send you an email asking for replenishment or you will be billed at our standard hourly rate if you exceed the allotted prepaid hour’s amount."
Defaults selected should be ok.
Click "save and send" when you are ready to deliver new retainer invoice to client. Go to side bar tab "retainer invoice" to view your newly sent retainer invoice.
Start Logging Your Hours
Once you sent your first retainer invoice, add any business you work for under your subcontractor agreement to "tasks" and start logging time accordingly.
Retainer 101 - Classroom knowledge
Retainer Invoice Statuses - Paid Vs Drawn
Drawn means the amount of that particular retainer has been used. Paid status will appear after a payment has been recorded for that retainer invoice. Those retainer invoices are not yet used or hours on the timesheet not spent when those clients under retainer invoices say "paid". The status with “Partially Drawn” if you used a partial retainer amount. Drawn shows up after you invoice and display a zero balance due. Your goal is to have drawn status and begin the cycle over of creating another Retainer Invoice.
You have a customer with name A. You are creating a retainer invoice for A and a payment has been made for that retainer. Let's say the amount is $1250. Now, for A he has an amount of $1250 with you. You can use this amount in any invoice. You can create 20 invoices for A. Apply that $1250 in any of that invoice. In our case, the $1250 is for our block of 10 hours. We prefer to simply invoice after all billable hours have been exhausted from the $1250 amount.
Invoicing After Exhausting Hours
We broke this to into another how to guide for creating invoices not retainer invoices. Invoices are simply a receipt of work but also fulfills the payment/billable work cycle.