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Tip of the Week - How To Not Lose Money With Retainers

Last week, we covered a powerful way to quickly get your invoicing completed in bulk using the Estimated Billings screen. This week we are going to work through how creative, advertising, or web design agencies can easily handle monthly retainers in WorkflowMax, and invoice any extra time spent on top of what was agreed upon.

Why Retainers Work

Retainers work especially well for creative companies whereby their engagment with a client is to effectively act as an outsourced design resource. Many businesses require a certain amount of creative work to be completed every month, whether that be website updates, newsletters, banner ads or regular advertisements. But often it doesn't make sense to have this resource employed in house, so it gets outsourced. Such regular work is perfect for the retainer model.

From the creative companies perspective, retainers are a great way to manage cashflow. As a business, you have guaranteed income each month that you don't have to go out and win, and you also have a set amount of hours for a person to work across the same period. But it isn't all roses.

In order to ensure the retainer engagement works well for your advertising/web design/digital agency, you need to have a good system in place to ensure you don't have any overruns, and if there are, you can bill for them.

Challenge with Retainers

Invoicing a retainer itself is easy - its just a fixed monthly amount which you can generate using pretty much any piece of software, or paper for that matter.

The difficulty comes in measuring what exactly has this job cost you as a company in terms of billable time to complete the work that was part of the fixed monthly amount. The last thing you want to be doing is working significantly more hours on your fixed retainer than was agreed and being unable to charge for that time.

How to make Retainers Profitable for Your Agency

In order to maintain visibility over how you are tracking, you need to setup an estimated amount of time against a job. You can then review against actuals as you progress through the month, and build custom notifications around it so that team members can be alerted as you approach the budgeted amount. Where the engagement with your client allows, you need to be able to capture overruns and invoice these separately to the retainer.

The setup:

  1. Create a new job, call it Monthly Retainer or similar
  2. Setup a non-billable task on the job for the pre-paid x hours
  3. Add a billable cost to the job for the value of the fixed monthly fee
  4. Save this job as a template so that you can use it to setup a monthly recurring job for this client
  5. Set up a notification from the Admin - Notifications menu, "custom" tab and create a notification for Job Task - Estimated vs Actual Time = 100% (or say 80% if you want a warning just prior to the time being used up). This means that when the estimated time is used up you will be alerted.

With the job setup, when actual time is logged and the non-billable task reaches 100%, go into the job and mark the non-billable task as complete (by ticking it), so no further time can be logged against it. Then add a new task to the job that is billable. Any new time captured on the job will be loaded against the billable task and can be included on the invoice.

Screen shot 2013-07-12 at 2.55.26 PM

When you generate an invoice for this job, you will see a cost item, which captures the fixed monthly fee, and the new task that captures the additional billable time.

Screen shot 2013-07-12 at 3.13.23 PM

Does your staff spend more time than they should on retainers? What are the other challenges that you face in managing your agency workflow? Share it in the comments below!

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Gavin George
A thought leader in the cloud computing industry, Gavin George is the Co-founder & General Manager of WorkflowMax - the cloud-based workflow management software used by thousands of marketing and advertising agencies worldwide. With over 7 years of experience in cloud computing solutions, Gavin intimately understands the challenges that companies face in transitioning and managing their business on the cloud.

Gavin George