Client Retainers

Accept upfront deposits from clients, draw against their balance as you deliver services, and maintain GAAP-compliant accounting throughout.

Overview

A retainer is an upfront payment a client makes before services are rendered. The funds sit in a liability account until you earn them by performing work, at which point you draw against the retainer and recognize the revenue.

Retainers are commonly used by:

• Law firms: Collecting trust account deposits before beginning legal work
• Consultants: Requiring an upfront commitment before starting an engagement
• Marketing agencies: Billing a monthly retainer for ongoing services
• Accountants and CPAs: Securing payment before tax season work begins
• Freelancers: Requesting a deposit before starting a project

Kantivo tracks retainer balances per customer, handles the accounting entries automatically, and gives you a clear view of how much each client has on deposit at any time.

Creating a Retainer

To set up a new retainer for a customer:

1. Navigate to the Customer record
2. Open the Retainers tab
3. Click New Retainer
4. Enter a Description (e.g., "Q2 2026 Marketing Retainer" or "Legal Representation Deposit")
5. Set the Retainer Amount -- the total the client has agreed to deposit
6. Click Create Retainer

The retainer is now active with a zero balance. The balance increases when the client makes deposits and decreases when you draw against it for completed work.

Recording Deposits

When a client sends funds toward their retainer:

1. Open the retainer from the customer's Retainers tab
2. Click Record Deposit
3. Enter the Amount received
4. Select the Deposit Account (typically your checking or bank account)
5. Add an optional Reference (check number, wire reference, etc.)
6. Click Save Deposit

Kantivo creates a journal entry that debits your bank account (asset increases) and credits the retainer liability account (liability increases). The retainer balance updates immediately.

Drawing from the Retainer

When you have completed work and want to convert part of the retainer into earned revenue:

1. Open the retainer from the customer's Retainers tab
2. Click Draw from Retainer
3. Enter the Amount to draw (must not exceed the available balance)
4. Provide a Description of the work performed (e.g., "March consulting hours - 12 hrs @ $150")
5. Select the Revenue Account where the income should be recognized
6. Click Save Draw

Kantivo creates a journal entry that debits the retainer liability account (liability decreases) and credits your revenue account (income increases). The retainer balance decreases by the draw amount.

Linking Draws to Invoices

If you issue an invoice for the work performed, you can apply the retainer draw as payment against that invoice. This keeps your accounts receivable clean and ensures the invoice shows as paid.

Transaction History

Every retainer maintains a complete transaction history showing all deposits and draws in chronological order. To view it:

1. Open the retainer from the customer's Retainers tab
2. The transaction history displays below the retainer summary

Each entry shows:

• Date: When the deposit or draw occurred
• Type: Deposit or Draw
• Amount: The dollar amount of the transaction
• Description: The reference or work description
• Running Balance: The retainer balance after this transaction

This history provides a clear paper trail for both you and your client, making it easy to reconcile at any time.

Accounting Treatment

Kantivo follows GAAP-compliant accounting for retainers. Here is how each transaction type is recorded in your general ledger:

When a Client Makes a Deposit

The cash comes in (asset increases), and you record an obligation to deliver services (liability increases). This is not revenue yet.

When You Draw Against the Retainer

The obligation decreases (liability goes down) and you recognize the revenue you have earned (income increases).

If a Retainer Is Refunded

If the client requests a refund of unused retainer funds, the liability decreases and cash goes out.