Prepaid hours: how to bill a retainer without arguments

A prepaid retainer sounds simple. The client buys a block of hours, you work through them, and everyone knows where they stand. The arguments start when nobody can say how many hours are left, or what one hour actually covered.

Neither of those is a pricing problem. Both are record-keeping problems, and both can be settled before the first hour is worked. What follows is a version of a prepaid agreement that holds up over months: short enough to fit on one page, with a balance the client can see without having to ask for it.

What to agree before the first hour

Four things, written down before any time is recorded:

• The block. How many hours it holds, what they cost, and when the client pays for them. If the hours start only once the money has arrived, say so.
• What counts. Calls, reviews, reading the brief and answering questions are work. Say that up front, so it is never a surprise in the first month.
• The record. Where the client can see the hours as they are used, and how often they will hear about the balance.
• The floor. What happens at zero: the work stops until the next top-up, or it carries on and the overrun is billed at the same rate.

None of these needs legal language. A short email that both sides reply to is enough, as long as it exists before the work starts. An agreement written after a disagreement is harder to settle, because by then each side remembers the parts that suit them.

Count in hours and minutes

Decide how time is measured and stick to it. Hours and minutes are easier to check against a record than decimals, and they are what a client sees on a calendar. A balance that reads 13:30 is a fact the client can verify. One that reads “about 14 hours” is a question waiting to be asked.

If you round, say how, and round each session the same way rather than the total at the end of the month. Rounding that only ever goes up is the quickest way to turn a client into an auditor.

Show the balance in every report

A client who sees the balance every week never has to ask for it, and has nothing to dispute at the end of the block. The report does not need a chart. Three figures are enough: what was bought, what has been used, and what is left.

Count the balance to the end of the period the report covers, so it matches the hours above it. A balance that includes work from after the report was written makes the two disagree, and a reader who finds one figure that does not add up starts checking all of them.

When the hours run out

Decide this before it happens, because it tends to happen mid-task. There are two workable answers: a top-up before the next hour is worked, or an agreed overrun billed at the same rate on the next invoice. What does not work is silence. A client who learns about the overrun from the invoice has a reason to argue, even if the work was worth every hour.

Pick a warning level for yourself, such as a week of typical work. When the balance drops under it, say so in the next report, in one sentence, and let the client decide what happens next. A sentence like “8:15 left on this block; at the current pace that is about a week” gives them time to plan the next top-up, or to slow the work down on purpose.

Top-ups and their invoices

A top-up is a new block of hours. If the client pays before the hours start, the invoice for it records money that has already been received, so it should say so: issued as paid, for the hours it adds. That invoice is a receipt for the client’s records, not a request.

If the hours run out mid-task, tracking continues and the balance goes under zero; the next top-up covers what went over. Say so in the next report, in one sentence.

Two projects, one client

The same client often has a second project on a separate agreement. Keep the hours separate too. A shared pool that two projects draw from is hard to reconcile later, because nobody can say which project used which hour.

If hours need to move from one block to the other, move them on purpose: record the transfer, with the number of hours and the day, and show it in both projects’ reports. A transfer that both reports mention is a decision the client can see. Hours that quietly drift from one project to the other are an argument waiting for a date.

Keep the agreement and the record together

Disagreements about a retainer tend to come down to two documents that say different things: the agreement and the record of the hours. Keep them close. Mention the agreed terms in the first report of each block, keep the balance in every report after it, and the record does the arguing for you, so nobody else has to.