Freelance retainer question
July 7, 2014 5:02 PM   Subscribe

Freelancers, how do you handle it when a retainer client doesn't use all the hours they've paid for?

I'm a freelance copywriter. At the beginning of the year, a long-time client suggested we go on retainer. At that time they had lots of work with short lead times. Getting paid up front, yippie skippie!

But over the past couple months, their hours have dried up. Between May and June, they've paid me for almost a month's worth of hours that I haven't worked. And now it's time to invoice for July.

This was a handshake deal, and we don't have a contract that covers this.

How do you typically handle this kind of situation, both in terms of time accounting and invoicing? How do you recommend I handle this with my client?
posted by ottereroticist to Work & Money (6 answers total) 4 users marked this as a favorite
Call up the client and ask what they want to do. They might think of your retainer as insurance that you'll be available when they want you, and they're okay with writing off the "extra" money that they don't spend. Or they may think of it as prepayment and want some sort of consideration for the future if it isn't used. But the key is that the two of you agree on it.

And get a contract so the next time this happens, you don't have to worry about it.
posted by Etrigan at 5:26 PM on July 7, 2014 [1 favorite]

There's two kinds of "retainers":

1. You get paid up front, you bill by the hour. At the end of the contract, you return any un-earned money.

2. You are paid a certain amount to be available to work. You probably don't bill by the hour, but the retainer covers the work you do, plus the fact that you remain available. You keep what you're paid.

What you do with the money depends on which kind of retainer arrangement you have.
posted by freshwater at 5:36 PM on July 7, 2014 [3 favorites]

Another option to consider if you want to be nice to them and encourage client happiness is to "roll over" unused hours to the future. You still bill the full retainer for this month but have some extra capacity to work for them
posted by cacao at 7:22 PM on July 7, 2014

Had you passed on other work to be fully available? First feel them out about what the situation is, a little slow or winding down. Then find an equitable way to split the difference.
posted by sammyo at 8:07 PM on July 7, 2014

You can structure a retainer however you want as long as both parties agree. There's no one standard as far as I can tell. That being said, I roll over extra hours to the next retainer period, but if there's a lot of unused hours, I'll only roll over about 20% of them. And if the next month there are more unused hours, it never gets higher than the 20% of the monthly allotment. (Some months I work more than the allotment and those get subtracted from the next month's balance.)

You need a ceiling against too many hours accumulating on the client's side of the ledger, because your client may come to you after four months of inactivity and justifiably demand you work on a project that totally monopolizes your time.

But my question to you is why are you operating on "handshake" deals? Please just stop.

The way it's supposed to work is:
1. Work out the terms
2. Get approval
3. Begin work

What you're doing is:
1. Begin work
2. Wonder about terms
3. Watch the working relationship blow up in your face
posted by Leontine at 8:10 PM on July 7, 2014 [4 favorites]

I talked with the client, who was relaxed about the whole thing, and we agreed to carry forward half of any credit balance of hours and decrease the retainer amount moving forward. I am also going to give them a small discount on retainer hours. I will write this up so we're both clear. Blown up relationship averted, good advice and collegial spanking much appreciated. Thanks, AskMe!
posted by ottereroticist at 1:42 PM on July 8, 2014

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