A common situation is a firm requires prepayment for services that will be delivered in the next month, quarter or over an extended period. Typically, this is part of an annual contract for services.
BillQuick allows you to manage this in different ways. In this User Tip, let’s look at the Retainer approach:
- Send a retainer invoice to the client the month before the work is done
- Record the receipt as a retainer
- Clear the retainer each month against the time and expenses charged to a project
- Post the invoice for revenue recognition.
Following is the workflow for the Retainer option. Assume the monthly prepaid amount per the contract is $5,000. You receive and earn this amount whether hours worked total more or less than $5,000.
To start, create your retainer invoice for the project on the Retainer History screen by clicking the Create Retainer Invoice button.
Depending on your preferences and situation, you may also wish to customize a retainer invoice format to make it look more like a regular invoice.
Note: Retainer History is available only in BillQuick Pro and Enterprise. BillQuick Basic users can create a retainer invoice on the Project-Billing screen and various reports show similar information as Retainer History.
Enter the $5000 retainer information. Click Process then click Cancel. You now see the new invoice below. You can Print or Email it.
Record the receipt of the retainer.
The project retainer now shows in the summary.
Now you bill the work done and apply the retainer to it.
On the Billing Review screen you will see the Net Bill amount. It is the total of the value of billable hours and expenses. In our scenario it does not matter whether the charges are greater or less than the $5,000. The contract says $5,000 per month; that is all the revenue you can capture.
To do so, replace the computed Net Bill amount with $5,000. BillQuick tracks the difference between the computed Net Bill amount and the amount you enter as a write-up or write-down. This helps you manage your costs going forward. (Project profit reports provide other useful information.)
Apply all of the Project Retainer Available to the Bill Amount.
Now, process the bill into an invoice.
You can print or email the invoice to the client if desired, but since you already sent a “retainer invoice” (one that probably looks like a regular invoice), you would not do this. Instead, you would set the internal flag for the invoice in BillQuick by clicking the Post button. (In other situations, this flag is set automatically when you print or email an invoice.)
When you create the invoice, you recognize the revenue (under accrual basis accounting). This shows up on your financial statement when you synchronize invoices with QuickBooks, Peachtree, Microsoft Office Accounting or MYOB Accounting (Australia) — whichever one you integrate with BillQuick.