Working with a Retainer (Versions Prior to 2011)
For information on using the AccountEdge Retainers feature (2011 version and later), go to Using the Retainers Feature
This information applies to AccountEdge versions prior to 2011
To set up the process of receiving, consuming and tracking retainers:
- Allow Category Tracking
In the System tab of Setup > Preferences, select the Preference "Turn on Category Tracking" and select "Categories are Not Required on All Transactions"
- Create a Category for this Client and Retainer
In Lists > Categories, create a new Category. (Tip: Use the month and year for each case with the clients initials as the Category ID, then name the catergory the Clients name, this way you can get a balance sheet report for each client with their name or case on it.)
- Create a Client Trust Account
Create an Asset Bank account for the Client Trust (Retainer) Funds. This account will reflect the funds in an actual Trust Fund checking account for the client.
- Create a Client Retainer Liability Account
Create a Liability account named Client Retainer. (Tip: if the case or work is less than a year then its considered a Current Liability, if longer than a year its considered a Long Term Liability.)
- Create Client Retainer Activity
a. Using the Time Billing module, go to Activity List and create a new activity called Client Retainer
b. Select Non-Hourly and Chargeable. Link this activity to the liability account in Step 4. Note: you will receive a warning that an activity is usually linked to an income account, select okay and continue.
To receive the initial and subsequent retainer(s):
- Create a Retainer Activity Slip
a. In the Time Billing Command Center, select Enter Activity Slip
b. Enter the employee assigned to the work
c. Enter the client
d. Enter the Activity Client Retainer
e. Enter a unit of 1 unit
f. Enter the amount of the retainer in the Rate Field
g. If you are using Jobs, you can enter a Job ID
h. Enter Notes if desired
i. Click Record
- Create an Invoice
a. In the Time Billing Command Center, select Prepare Time Billing Invoice
b. Select client's name
c. Click Record
d. Bill the total amount for the Retainer
e. Select Prepare Invoice
f. On the resultant Invoice, enter the Category you created for this Client
g. Click Record
- Receive Payment
a. In the Sales Command Center, select Receive Payments
b. On the top of the Receive Payments window, indicate "Deposit to Account", and select the Client Trust Account
c. Enter the total Amount Received, the method of payment (entering in details if preferred), then apply the amount received to the invoice. (This will give the client an invoice for the retainer, pay the Accounts Receivable, and establish the Liability.)
To Consume the Retainer (Bill Client for Work)
For Time Billing work being billed to this retainer
- Create an Activity Slip for work
a. Use your other, regular activities to record time
- Invoice for work
a. At the appropriate time (once per week, per month, etc.), select Prepare Time Billing Invoice in the Time Billing Command Center
b. Bill for the activities accumulated so far, then select Prepare Invoice.
c. On the resultant invoice, add another line with -1 in the unit column, Client Retainer as the Activity, and the total amount of the invoice. This will create a negative-value line item, resulting in a zero-balance invoice.
d. If you are using Jobs, enter the job number for each amount.
e. Enter the client category.
f. Click Record.
- Transfer funds from Trust Account to Regular Checking Account
In the Accounts Command Center, select "Transfer Money" to transfer funds from the Client Trust Account to the regular checking account.
- Repeat steps 1-3 for additional Time Billing work
To see the current balance of the retainer, select the Balance Sheet of the Categories section under the Acounts tab on the Index to Reports. Customize the report for the Client's Category then select Display. This report will display the current balance of the Client Retainer liability account for the client, as well as the receipt of the retainer. Also, the amount of Retainer that was used will be shown in the Current Earnings account.
How to settle any unused retainer amounts
If your agreement with the client indicates the client will forfeit the unused retainer, follow the steps below:
- Create an activity called unused retainer; it will be Non-Hourly and Chargeable. The linked income account will be the preferred income account.
- Enter an Activity Slip for Client Retainer, enter the unit as -1 and the amount will be the remainder of the retainer. Then record the activity slip. Enter the job if applicable.
- Enter an Activity Slip for Unused Retainer, enter 1 as the unit and the amount of the unused retainer, then record. Enter the job if applicable.
- From the Time Billing Command Center select Prepare Time Billing Invoice and select the client. Bill both activities in full and select Prepare Invoice. This will create a zero-balance invoice.
- The remainder of the retainer will be removed from the liability account and will post the unused amount into the appropriate income account.
If your agreement states the client is to be refunded the full amount of the unused retainer follow the steps below:
- From the Time Billing Command Center enter an Activity Slip for Retainer, enter the unit as -1 and in the amount enter the remainder of the retainer.
- Enter job if applicable. Select Record.
- Select Prepare Time Billing Invoice from the Time Billing Command Center and select the client from the Work in Progress list. Select OK.
- Bill the total amount and select Prepare Invoice.
- This invoice displayed with show a negative amount. Be sure to assign the client category. Select Record.
- This will create a credit in the amount of the unused retainer and will remove the unused retainer from the liability account. This credit can be found in the Sales Register under the Returns & Credits tab. This credit can then be refunded to the customer by selecting the credit and select Pay Refund. Before recording this refund, be sure to select the Client Trust account to pay the refund from.