Freelancers, entrepreneurs or small business owners are constantly on the brink of cash flow or finances to operate business seamlessly. An on-going business has recurring office expenditures month after month and hence, it becomes important to keep an eye on incoming finances from the clients. The looming threat from clients always remains whether they’ll make payment on time or not or worst not paying at all. Maybe at times, due to busy work schedule even you tend to miss out on sending invoices to them.

The best way to cope with these issues is by adopting a smart and promising invoice maker. Not only the smart accounting system should help you with sending invoices but also reminds you of chasing the late payers for you. Sending recurring invoices is certainly going to bring some financial stability to your business. An advanced level of financial security can also be brought in by including retainer agreement.

A retainer fee is a part payment made in advance for the services which are yet to be delivered. This can be considered as a deposit paid in advance towards the entire service package offered. Hiring someone on a retainer fee means getting a dedicated contractor for the time or the project. Of course, there are few leverage and limitations when it comes to working on retainer agreements. One can easily account for your time and money.

Pros & Cons of Retainer Agreement

Most of the time, hiring party don’t like to rely on the approach of paying upfront for the services due to obvious reasons. No party would like to take a chance of receiving goods or services, not per the expected standards. And what if it doesn’t get delivered at all? Of course, it would require you to trust and delegate the task. On the contrary, what it means for the hired party is that their time has already been reserved for the work to deliver on time. The agreement would bind them legally to the task. However, since you have already committed to a certain task means that if there comes along your way another lucrative project than you’ll need to postpone it until you deliver the current one.

Flat Retainer Fee Vs Hourly Retainer Fee

Contractors from varied fields like to work on fixed or flat retainer instead of on an hourly basis as it gives them more flexibility. You can complete the work well in advance as you know how much time it would take and moreover, you also know beforehand how much you are going to earn from it. This factor leaves you well informed when you go with a flat retainer fee. As an independent contractor, you will be assured of the payment for the time you have contributed, plus it is an added bonus of getting paid in advance.

Through the client’s perspective, it is quite understood that how to establish trust with upfront payment? If its a new client, maybe you can agree on a small project with no-retainer, to begin with, or you can start with a small retainer that would gradually increase with the further projects. If you are focussing on hourly retainer than offering a small discount is the way forward to build trust.

Retainer Fee In Accounting, Invoice Estimate

Based on your hourly rate and the number of hours required by the project, you can come to an easy conclusion of total cost and can charge a certain amount as a retainer fee. But what if you have exceeded the total number of hours or finished earlier than anticipated? How are you going to put it alongside the accounting? You’ll need a professional invoice estimate app that can easily help you with time tracking and maintaining retainer fee.

Wrapping Up:

Since Cash is King for small business owners, you need an invoicing system in place which maintains a positive cash flow on accounts receivable and accounts payable.

Moon Invoice is simple in User Interface, sober in features and sophisticated for all Small & Medium Enterprise and Businesses. Designed with the highly integrated intelligent system, get all the invoicing solutions with an app to have a hassle-free business operation.

Recurring Payments Vs Recurring Invoices

Recurring Payments	Recurring Invoices
Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved.	Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves.
A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this.	A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies.

Pros and Cons of Recurring Invoices

Pros	Cons
You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered.	You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created.
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly.	It could be difficult to cope with recurring invoices if a transaction fails for any reason.

Net 45	Invoice is due in full within 45 days with no early payment discount offered
2/10 net 45 terms	2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/15 net 45 terms	1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days
1/10 net 45 terms	1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/7 net 45 terms	1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days

Category	Net Method vs. Gross Method	Explanation
Calculation Approach	- Applies tax credits first; reduces taxable income before computing tax liability.	- Doesn't apply tax credits; computes taxable income without considering tax credits.
Tax Credit Eligibility	- Allows for greater likelihood of tax credit eligibility due to reduced taxable income.	- Limits tax credit eligibility because taxable income hasn't been reduced yet.
Itemized Deduction Requirement	- Lowers threshold requirement for itemizing deductions due to decreased taxable income.	- Raises threshold requirement for itemizing deductions due to higher taxable income.
Advantages	- Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits.	- Results in higher taxable income compared to net method.
Disadvantages	- May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits.	- Increases taxable income and may result in higher overall tax bill.