Retainer

What it means

A retainer is a fixed regular price for a defined scope of services, regardless of how much time they took in a given month. The client gets a predictable cost, the provider predictable income, and both less administration.

It works only with the scope clearly described: what is included, what is billed separately, and what happens when volumes change materially. Without that sentence a retainer becomes a dispute sooner or later.

A retainer differs from a fixed project price agreed in a contract for work. That is paid once for a specific result; a retainer is paid repeatedly for an ongoing service, and its scope is measured by the volume of work in a period rather than by delivery of a result.

How it works in practice

In accounting the scope follows the number of documents, employees and bank accounts, and whether the company is VAT registered. Our calculator derives the monthly retainer from those inputs so the price is known in advance.

Work outside the scope - consultations, representation in an audit, reconstructing earlier periods - is billed separately. The retainer is the predictable part, not a ceiling on any amount of work.

The client books a monthly accounting retainer as a cost of the month the service covered. Work on the annual closing, however, is done after the year ends, so at the close we recognise it through an estimated accrual, putting the cost into the year it belongs to.

What to watch out for

As the company grows the scope is revisited, or either quality slips or the provider runs at a loss. A sensible contract therefore includes a mechanism for adjusting when agreed volumes are exceeded.

A retainer assumes documents arrive as the year goes on. Bringing in a whole year at once creates work that does not fit the monthly scope and is billed separately, and it risks something not being processed before the filing deadline.