Retainer Invoices
What is a retainer invoice?
A Retainer Invoice is used to collect an advance payment before any work is actually performed or completed.
Here's how it works in practice. A customer agrees to hire you, and you ask them to pay a sum in advance, sometimes called a retainer or deposit. You issue a retainer invoice to request that money. The customer pays it, and that amount sits as a credit on their account. Then, as you complete work and issue your regular (final) invoices, you draw down against that retainer invoice instead of asking for fresh payment each time.
In Zoho FSM, the retainer is derived from the estimate. You can enter the percentage of the amount you'd like to receive as an advance on the estimate, and as soon as the estimate is accepted, a retainer invoice for the customer will be automatically created, after which you record payment for this retainer and apply it to invoices later.
Use case
Riverside Office Park (customer) needs two rooftop units replaced before summer. The job is large — new equipment, crane rental, and a multi-day install. They hire Apex Mechanical (HVAC provider using Zoho FSM) for the job. Because Apex must purchase the RTUs and book the crane, it requires an advance. They create an Estimate in Zoho FSM covering equipment, labor, crane rental, and materials — total $48,000. Because this is a large install, Apex Mechanical sets the retainer as a percentage of the estimate; they choose 40%, so the retainer works out to $19,200. When the install is complete and inspected, Apex generates the final Invoice from the work order for the full $48,000. They apply the retainer to this invoice — the $19,200 credit is drawn down, and the invoice updates to show a remaining balance due of $28,800. Riverside pays the balance, and the retainer is recognized as earned revenue.
Set Up Automatic Retainer Invoice Creation
- Permission Required: Create of Retainer Invoice, View of Estimates
- Select the Estimates module from the Work Order Management menu and click Create.
- In the Create Estimate overlay, select the checkbox Create a retainer invoice for this estimate automatically. In the field Percentage to be collected, enter the percentage that should be used to automatically create the retainer invoice.
- The retainer percentage entered will be applied to the Grand Total of the estimate.
- The retainer invoice will be automatically created after the estimate is approved.
You can find all the retainer invoices in a separate module, Retainer Invoice, that can be found under the Billing menu. The retainer associated with the estimate will be shown under the Retainer Details section in the left panel of the Estimate Details page.
The created retainer invoice will be in the Draft status. Click on Open In ZohoBooks to navigate to the associated retainer invoice in the integrated finance org. If your integrated finance org is Zoho Invoice, you will not be able to view the retainer invoice there, as Zoho Invoice does not support retainer invoices.
Once created, you can perform the following actions on the retainer invoice:
- Send Retainer Invoice
- Record Payment
- Download, Print, Edit, Delete
Send Retainer Invoice
To email the retainer invoice to the customer:
- Select the Retainer Invoice module from the Billing menu and click on the retainer invoice you want to send.
- Click Send Retainer Invoice.
- Select a recipient and click Send.
The status of the retainer invoice will change to Sent.
Record Payment
- Permission Required: Record Payment of Retainer Invoice, Create of Payments
To record the payment when you receive the amount from your customers:
- Select the Retainer Invoice module from the Billing menu and click on the retainer invoice for which you want to record the payment.
- Click Record Payment.
- Enter the necessary details and click Record Payment.
Once payment for the retainer has been received or recorded, the Retainer Received amount appears below the Grand Total, on the Services and parts tab of the Estimate Details page.
Using the Retainer Invoices
Once you've collected a retainer, you can apply that amount toward the customer's invoices. You can apply this amount to one or more invoices, reducing the balance the customer needs to pay. To do so:
- Select the Retainer Invoice module from the Billing menu and click on the retainer invoice for which you want to record the payment.
- Click Apply Now in the Available Credits section displayed on top.
- Enter the amount you want to use from the credits and click Apply Credits.
The retainers will appear under two sections: Associated Retainers, Other Retainers. Associated Retainers are those linked to the estimates of the work orders for which the invoice was created, while Other Retainers are the remaining retainers created for this customer.
You can either use the credits to record the payment of the full invoice amount or a part of the invoice amount. After you use the credits to record the payment of only a part of the invoice amount, you can proceed to record the payment of the remaining amount.
Retainer Invoice Statuses
A retainer invoice can have the following statuses:
- Draft: This is the status of a retainer invoice after it is created.
- Sent: The retainer invoice has been emailed to the customer.
- Pending Approval: If you have enabled the Approval process in the integrated finance org and the retainer invoice is yet to be approved, then the status will be Pending Approval.
- Approved: If you have enabled the Approval process in the integrated finance org and the retainer invoice has been approved, then the status will be Approved.
- Rejected: If you have enabled the Approval process in the integrated finance org and the retainer invoice has been rejected, then the status will be Rejected.
- Paid: Payment has been received for the retainer or the payment for the retainer has been recorded.
- Partially Paid: Partial payment has been received for the retainer or partial payment for the retainer has been recorded.
- Drawn: Amount from the retainer invoice has been fully used in one or more invoices.
- Partially Drawn: Amount from the retainer invoice has been partially used in one or more invoices.
- Void: Retainer has been marked as void from the integrated finance org.
You can filter the retainer invoices of different statuses using the Views in the Retainer Invoice module.
Points to remember
- If you disable (hide) the Estimates module, the Retainer Invoice module will automatically get disabled.
- Retainer invoices will not be supported in the South Africa tax edition.
- By default, the Retainer Invoices module is not selected in Zoho Books, under Settings > Setup & Configurations > General. However, with the introduction of Retainer Invoices in Zoho FSM, this module is enabled automatically in your integrated Zoho Books org. If you disable it, the functionality in Zoho FSM will continue to work, but retainer invoices will no longer sync with Zoho Books.
- The retainer invoice limit is tied to your invoice count and increases when you buy the invoice add-on.
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