Changing up your business’s payment structure is a big deal. It’s important to do your due diligence to determine what will work best for you and your clients.
Retainers are a popular choice for service providers. Here, we’re reviewing everything you need to know before committing to this form of payment agreement.
Retainers are structured agreements in which the client agrees to pay a specific amount of money to a business — usually monthly — and, in return, receives a set of services during that same time period. Clients pay these fees either in advance of services being provided or at the end of the month once the work has been completed.
Once you determine that a retainer is the right choice for collecting payment for your services, you need to figure out which type you’ll use. Below are the two most common types you’ll come across.
A pre-paid retainer requires that you commit to handling a certain amount of work during the predetermined period. This work can be in the form of hours or output. Businesses use pre-paid models when they need specific work done — work that’s broken into a defined set of tasks. Think accounting, SEO and website maintenance, for example.
Sometimes, a client may not have an immediate need for your company’s services but wants you to be available when they do. This often happens with consultants working in fields like IT, web development and other specialized services. A customer will pay a fee to access your expertise as problems arise. A post-paid retainer will make you available as needed.
Instead of spending time and money looking for new clients to keep cash flow coming in, many business owners choose to build a retainer program. Recurring work serves as an insurance policy of sorts, especially when times are tough.
There are three primary reasons to go with retainers:
If you’re intrigued and looking to switch to retainers, you’ll need to consider how you’ll keep track of retainer periods and accurately attach work to each client’s agreement. Follow the steps below to set up an efficient retainer management system.
The first step in managing retainer projects is to establish a scope of work. Talk with your client to set expectations about what your company can help them achieve. Then, establish the type and amount of work you'll do during the retainer period.
To ensure your retainer program is successful, you’ll need to be diligent about keeping track of internal tasks. Task management software can offer the visibility your team needs to categorize, assign and complete all the tasks involved in client work.
Upfront payment is an expression of trust, and your clients expect you to accurately track the work you’ve done for them. Reporting on hours and tasks is necessary for accurate billing, and a platform like Accelo can compile live dashboard reports for you automatically. A client portal can also be helpful for providing real-time status updates to retainer clients, whom you probably interact with less often than one-time clients.
Billing is a headache when you don’t have an organized way to process retainer invoices. Retainer management software that automatically attaches work and hours to a client record can save time and prevent confusion when it’s time to bill for recurring work. Most billing tools even have customization options to make sure your retainers and invoices are aligned with your brand materials.
Dive deeper into retainer management best practices and tips to find out what this payment structure could do for your business's bottom line.