Retainer Invoices
A retainer invoice asks a customer to pay before the work is done. The money you collect is held against that customer and drawn down later, as you raise the invoices it pays for. Use it for deposits, upfront project fees, or a balance a client tops up and spends over time.
It is not an ordinary invoice. An invoice records revenue you are owed; a retainer records money you are holding on the customer's behalf until the work it covers is invoiced. That is also why a retainer carries no taxes: tax is charged on the real invoice the retainer is drawn into, not on the advance itself.
To access retainer invoices, navigate to the Sales module on the sidebar and click on Retainer Invoices.
Turn the module on
Go to Settings → Features and enable Retainer invoices. That is the whole setup: a Retainer Invoices entry appears in the Sales menu, and a settings page for it appears under Settings → Documents with the optional preferences:
| Setting | What it does |
|---|---|
| Raise a retainer when a quote is accepted | Optional. Creates a draft retainer the moment a customer accepts a quote. |
| Percentage of the quote total | How much of the quote to request up front, for both the automatic raise and the "Ask for a deposit" shortcut. |
| Terms & customer notes | Prefilled onto every new retainer. |
Numbering lives on the same page: retainers take RET- numbers automatically unless you switch that off.
The three figures on a retainer
Every retainer carries three amounts, and they answer three different questions:
| Figure | What it means |
|---|---|
| Collected | How much of the retainer the customer has actually paid |
| Drawn | How much of that money you have since applied to invoices |
| Balance | What is still held and unspent, which is collected minus drawn |
Because of that, a retainer has two progress states rather than one: whether it has been paid, and whether it has been used up. The list shows both, so a retainer that is fully collected but untouched reads differently from one that is spent.
Raise a retainer
- Navigate to Sales → Retainer Invoices and click New retainer invoice.
- Choose the customer, then write what the deposit is for and the amount you are asking. A retainer's lines are just a description and an amount. There are no products, quantities, taxes or discounts on it, because a deposit is not a sale: you are asking for money, not selling goods. Add more lines if one request covers several things, for example a deposit per project phase.
- Optionally set an expiry date, and adjust the terms or notes carried over from your settings.
- Click Save.
Send it to the customer from the retainer itself. The emailed copy carries a payment link, so the customer can settle it online without signing in.
Note
Collect the money
Open the retainer and choose Record payment, or use the same action from the list.
Record the amount, the payment mode, the account it was deposited to, and the date. The amount is prefilled with what is still outstanding and cannot exceed it.
Two rules apply:
- A draft retainer cannot be paid. Send it first.
- The payment must be in the same currency as the retainer.
Apply it to an invoice
This is the point of the whole document: turning money you are holding into money you have earned.
Open the retainer and choose Apply to invoices, then pick the invoices to settle and how much of the balance each should take. One retainer can pay several invoices, and one invoice can draw on more than one retainer.
Two limits are enforced:
- You cannot apply more than the retainer's balance.
- You cannot apply more to an invoice than its amount due.
As you apply, the invoice's due amount falls and the retainer's drawn figure rises by the same amount. Nothing is duplicated, because the money simply moves from one column to the other.
Tip
Undo an application
If you applied a retainer to the wrong invoice, unapply it. The invoice's due amount goes back up and the money returns to the retainer's balance, ready to be applied elsewhere.
Refund what is left
If the customer never spends the money, refund it. Open the retainer and record a refund against the undrawn balance.
You can only refund what has not been drawn. Money already applied to invoices belongs to those invoices, so refund the balance first and leave the drawdowns alone.
Ask for a deposit on a quote
Open the quote and choose Ask for a deposit. A retainer opens for that customer with a single line for the configured percentage of the quote's total, described as an advance on that quote.
The amount is a starting point, not a rule: change it before saving if this customer agreed to something else.
Raise a retainer automatically from a quote
You can have a retainer raised the moment a customer accepts a quote, so the deposit conversation happens while they are still saying yes.
Go to Settings → Documents → Retainer Invoices, turn on the automatic option, and set the percentage of the quote to request.
From then on, accepting a quote raises a draft retainer for that percentage of its total, carrying the quote's customer, currency and location. It fires only when the quote actually moves to accepted, and a quote raises at most one automatic retainer, so re-saving an accepted quote never creates another.
Voiding a retainer
A retainer that holds customer money cannot simply be voided, because the money would have nowhere to go. Refund the remaining balance first, then void it. Drawdowns already applied to invoices stay where they are.
How it differs from a credit note
Both reduce what a customer owes, but they come from opposite directions.
- A retainer is money the customer paid you in advance, before the work was invoiced.
- A credit note is value you owe back to the customer, usually after an invoice was raised and something was returned or adjusted.
If you are holding cash up front, it is a retainer. If you are giving value back, it is a credit note.
Accounting treatment
A retainer is money you are holding, not money you have earned. Until it is drawn against an invoice, it belongs to the customer.
When you receive a retainer payment, Upscale increases your bank account and records the same amount as a liability, not as income. Your profit and loss does not move.
When the retainer is applied to an invoice, the liability reduces and the income is recognised on that invoice, in the period the work was actually invoiced.
On your reports:
- The balance appears under liabilities on the balance sheet, usually as Unearned Revenue or Customer Advances.
- It does not reduce your receivables ageing. Money held in advance and money owed to you are different facts, and netting them would hide both.
- A separate report shows customer advances and retainer balances, so you can see what you are holding and against whom.
This is the correct treatment and it is worth understanding: recording a retainer as income when it arrives overstates your profit in that period and understates it later, and if the customer cancels, you would be refunding money you had already reported as earned.