Retainer Invoice in Ireland
A retainer invoice is sent to the customer in order to request payment for a retainer fee. A retainer fee is an upfront payment to secure time or service of professionals and this fee is requested before the project starts to enhance the parties’ confidence in trade. For example, the retainer fee book slots for professionals such as accountants, freelancers and lawyers. It important to note that the amount charged in a retainer fee is an estimated figure only and is subject to change in line with the real scope of the services.
Also note that the payment received via a retention invoice is not recorded as revenue but as a liability. The liability is removed once the services are provided to the client and then revenue is recorded.
Example
As an example, suppose a firm of lawyers charges a €1,000 retainer fee and their hourly rate is €100. If they spend 10 hours on the client’s work, the retainer fee is fully utilized and the €1,000 is recorded as revenue or income for the lawyer’s firm.
On the other hand, if the case is completed within 5 hours, the balance of €500 (5 x €100) is refunded to the client. If it takes more than 10 hours to conclude the case, then the additional hours are billed to the client.
Advantages and Disadvantages of Retainer Invoices
Advantages | Disadvantages |
A retainer invoice helps to enhance the commitment of both parties in the trade. | Calculating the retainer fee is often challenging as it may not be easy to predict working hours for a specific job. |
A retainer invoice enables service providers to predict cash flow more accurately as they can easily predict the expected date of receiving the funds. | After paying the retainer fee, the customers might perceive that the service provider will not be committed to the quality of the services. |
A retainer invoice helps to prioritize clients. For instance, the clients paying regular retainer fees can be a top priority for service providers than other clients hiring them on an ad hoc basis. | Charging a retainer fee might make business or service providers less competitive as customers will be more inclined towards service providers that do not charge a retainer fee. |
Monthly Retainer Invoice
A monthly retainer invoice is similar to a retainer invoice, in that it is a fee for professional service. However, a monthly retainer invoice is used when the client is to pay a retainer fee each month. This type of invoice is frequently used when there is an ongoing business relationship between the service provider and client. In the event that there is a balance of payment at the end of the month, it is adjusted in the next months retainer fee and vice versa.Email Template for a Retainer Invoice
Hello {Name of the customer},
This email requests a retention fee for the month/year for the services to be performed. Following is the expected scope of services.
Expected hours: {AAA} Per hour rate: {BBB} Total retention amount: {CCC}
Please note that the expected hours are subject to change in line with reality. Further, we have attached the relevant invoice for your perusal and consideration.
You are kindly requested to pay prompt attention to this matter and pay the retention in order to continue working with us. Please accept our thanks if you have already paid the invoice.
If you have any questions, kindly contact us at {your contact details}.
Best regards,
{Your name}
{Your position in the company}
{Your company name}
How to Create a Retainer Invoice
Method 1: Use our simple invoice software
Method 2: Download a free retainer invoice template:
CREATE INVOICE ONLINE
Invoicing Tools for Ireland: