Ask the Accounting Community

All, we are considered a small business and are solely Professional Services.  It has been a very very long time since I have had the need for retainer language in my contracts.  Looking to see if anyone has some insight on that and where I can start to build this language into my contracts.

Are there rules about when the retainer has to be released? Does it have to be applied to the first invoice or can it be one invoice at the end (or final invoice)?  

We are thinking of charging 10% of the total yearly fee? 

Let me know, thanks!

Hi Sonya,

There are no rules with retainers that I know of. It generally depends on the context of the engagement in my experience. Also, how they are structured (held until end or applied during the engagement) depends on the context. Many people in litigation support services will require a retainer that is applied to the final billing, and they prepare billings that are due and payable on receipt through the engagement. The amount of the retainer depends on how much financial exposure you think you will have on the project. I have seen firms charge a retainer of 50% of the expected project cost at the outset. Other firms I have seen will only work off retainer - they are paid a retainer and bill to that retainer until it is utilized, and then request an additional retainer to continue the work.

I hope that this is helpful information.

Ron

All, we are considered a small business and are solely Professional Services.  It has been a very very long time since I have had the need for retainer language in my contracts.  Looking to see if anyone has some insight on that and where I can start to build this language into my contracts.

Are there rules about when the retainer has to be released? Does it have to be applied to the first invoice or can it be one invoice at the end (or final invoice)?  

We are thinking of charging 10% of the total yearly fee? 

Let me know, thanks!