For many marketing agencies, building consistent, monthly recurring revenue is one of the top ways to build your agency quickly and stay on top of your cash flow. Still, some agencies struggle to implement marketing agency retainer billing in a way that keeps cash flow consistent. If you’re currently billing on a retainer, this blog will show you some tips for optimizing that process to improve your cash flow. If you’re new to retainer billing, you’ll learn how to bill on retainer and why it’s a preferred method for marketing agencies who want to accelerate their growth. Let’s get started.
First things first. What is retainer billing?
Retainer billing is when you have your clients make an advance payment on your services, which funds the initial expenses of your work together. One reason this method is particularly great for marketing agencies is because it guarantees that you’ll be paid for your work and means you don’t have to wait until services have been rendered or a project has been completed. For a lot of marketing agencies, retainer billing is also done on a monthly basis for recurring clients. This is the most common use for this billing method among marketing agencies.
Benefits of a Retainer vs. Hourly Billing
If you’re curious about retainer billing but have been billing by the hour, there are a few key benefits that you should consider about switching to retainer billing. First, it prioritizes the value of the service you provide over the amount of time you spent on a specific task. If you are an expert in your field, you should feel empowered to charge based on value rather than hours. This approach also allows you to enter engagements with clients that are consistent and help you to project your future income. This can go a long way towards giving you the ability to grow and scale, knowing that you’ll have the income to meet growing expenses in the future. Finally, it helps you maintain a more consistent budget by creating more consistency in your cash flow.
How to Bill Retainer Fees
Now that you’ve decided to move forward with the retainer model, there are a few different ways you can bill retainer fees. First, you can send your clients an invoice every month prior to when services are rendered or on a contractually agreed upon date. While this method is effective and prioritizes the comfort of your clients, it’s not always the best for cash flow, as clients may delay making payments or forget that they are due. An alternative method for how to bill on retainer is to collect an ACH authorization form from your clients that allows you to automatically bank draft their account on a contractually agreed upon date each month. Using this method, you will not have to wait for your clients to pay your invoice.
Tips for Invoicing Clients for their Monthly Retainer
Though the ACH authorization method is certainly easier and better for cash flow, some agencies may not feel comfortable asking for bank information from clients at first. If this is the case for you, there are still some ways you can optimize your billing process. For example:
- Implementing late fees or pay on time incentives for clients
- Creating automated invoice reminders
- Sending your invoice before the due date
- Personally following up with clients when invoices are past due
- Setting your invoices on a recurring basis so that you are never late sending them
- Using a payment processor that works quickly to deposit your payments from clients
These steps will help you make the most of your retainer billing process, even if you do not decide to streamline it with a sales receipt. Of course, the best way to do this is to hire a professional who can handle your invoicing on your terms and do so in a way that helps you get paid quickly and efficiently.
How to Run a Recurring Sales Receipt in QuickBooks Online
If you decide to take our advice and run a monthly sales receipt, there are some steps you’ll need to take. First, you’ll need to collect an ACH authorization form from your clients. While the guidelines say you can get verbal consent for this, we highly recommend getting a signed copy from your clients to mitigate liability issues. Once you have that authorization signed, take the following steps:
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