TRUE JOE WAYS - Tracking Client Retainers

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Tracking Client Retainers

There are various methods for tracking client retainers, but we have found the following processes to work best for The Woodard Consulting Group and also for our clients.

Perform the following steps to track retainers in QuickBooks:

Step 1. Create an Other Current Liability account called "Client Retainers."

Step 2. Create an Other Charge Item called "Retainer" and enter the "Client Retainers" liability account into the Income field.

Step 3. Create an invoice template called "Retainer" that includes only the item column (screen only), the description column and the amount column. Make the printed title of the form "Retainer Request" rather than "Invoice."

Step 4. When you need to receive a retainer from a client, send them a Retainer Request (i.e. Invoice) that uses the Retainer item and lists the amount of the retainer. Use the Memo field to note the retainer activity. For example, type, "Retainer Received - Data Troubleshooting Engagement."

Tip: As with any invoice, you can use QuickBooks Merchant Services combined with QuickBooks Billing Services to send this form by email and receive payment online. You can also use QuickBooks Merchant services to receive this retainer through an e-check payment.

Note: For retainer tracking to work correctly, you must use a job record for each engagement and you must apply the retainer at the engagement level.

Step 5. When the client provides the retainer, use the Receive Payments window to apply the receipt to the Retainer Request (i.e. Invoice).

Step 6. Invoice the client for completed work (or on a progress basis).

Step 7. Create a Credit Memo using the Retainer item and apply the Credit Memo to the invoice you created in the previous step.

Step 8. Print the invoice showing the total of the invoice, the retainer applied and any balance due.

Creating a Client Retainer Summary Report

Perform the following steps to create a client retainer summary report.

Step 1. Select the Reports menu and then select Custom Summary Report.

Step 2. On the Display Tab, set the Date range to "All."

Step 3. On the Display Tab total the rows by "Customer."

Step 4. On the Display Tab, click Advanced, go to the Display Rows section and select the "Non Zero" radio button. Then, click OK. to close the Advanced Options window.

Step 5. On the Filters tab, filter by account for the "Client Deposits" account.

Step 6. On the Header/Footer tab title the report, "Client Retainer Summary."

Step 7. Memorize the report for future use.

Creating a Client Retainer Detail Report

Perform the following steps to create a client retainer detail report:

Step 1. Select the Reports menu and then select Custom Transaction Detail Report.

Step 2. On the Display Tab, set the date range to "All."

Step 3. On the Display Tab and in the Total By field select "Customer."

Step 4. On the Display Tab, add and remove columns until only the following columns show on the report: Date, Memo, Amount and Balance

Step 5. On the Filters Tab, filter by account for the "Client Deposits" account.

Step 6. On the Header/Footer Tab title the report "Client Retainer Detail" and memorize the report for future use.

Tip: When you need to send retainer detail reports to a specific client, filter by customer/job name and email the report to the client.

Options for Clearing Zero Balance Accounts from the Report: The retainer detail report above will show all retainer activity, including retainers that are fully exhausted (i.e. those that have a zero balance). If you prefer, you can reconcile the Client Deposits account using the Bank Reconciliation window. Doing so will not only provide additional accountability for retainer management, it will also give you an additional filter based on cleared status. If you filter the report by cleared status for "Uncleared," all exhausted retainers will drop from the report. There is an alternative option if you do not want to reconcile the Client Retainer account. You can create two Customer Types called "Open" and "Closed." Assign each engagement with the "Open" Customer Type when you create the job and then change to the "Closed" Customer Type when retainers are exhausted (or when the engagement is closed). Then, you can filter the Client Retainer Detail report by Customer Type for "Open."

Note: The job status and job type fields do not have the same impact on QuickBooks reports. You cannot use these fields for this purpose.

Joe Woodard