Retainer Meaning Agreement Payment Terms

Retainer Meaning

A retainer is an arrangement between the firm and service provider wherein the service provider is paid an advance for the benefits likely to be taken at some future period. Retainers are commonly used in areas like Law, Accounting, HR, etc.

Fee

Retainer fees are the upfront cost paid to the retainers. They are of two types: unearned and earned fees.

One may pay an unearned fee before the start of any work.Earned fees are exactly the opposite; one pays after work starts.

There is no guarantee that the fee will ensure the successful final output. The fees are often deposited in a different account than the receiver’s existing account to ensure that the funds are unused for other purposes.

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Payment Terms

Retainers are paid upfront in general scenarios, i.e., consultants ask for the 100% fees in advance. However, in some cases, consultants may change their fee structure based on the type of work to be performed and can change their billing cycle Billing CycleThe billing cycle is the time period between one billing statement and the next billing date that companies generate for its services and products sold to the customers. The cycle could be monthly, quarterly or even annually. read more based on monthly, weekly, quarterly, or semi-annually.

Generally, one calculates the retainer fees hourly, i.e., an hourly rate times the number of work hours. For example, the per hour work rate is $60, and the retainer expects to provide the assignment, which involves 100 hours of work monthly. So, the monthly fees one may calculate as $60*100 = $6,000 per month.

The fee is calculated well in advance to determine whether they are earning reasonable profit in an assignment or not.

Retainer Agreement

The retainer agreement is a contract between the consultant and the person taking the consultant’s services. In the agreement, both the parties mentioned and agreed on all the terms and conditions related to the service. Also, the details like fees, payment cycle, percentage of fees, etc., are all mentioned in the retainer agreement. In addition, the deal provides safety and guarantees to both the parties in terms of the confirmation of payment to the consultant and the promise of the work to be done to the person taking the consultant’s services. Therefore, both parties must sign the retainer agreement before starting the job.

Importance

Retainer services provide the flexibility of work and freedom, different options, and variety in a particular work area.They provide a “multi-channel” or integrated approach and are most appropriate for companies looking for the same.It provides the opportunity to reach multiple audiences through channels like advertising, direct mail, radio, television, and payroll.The retainers provide the strategic approach using all the above channels and creativity of designs. Because of this, results are easier to track, increasing the chances of success more efficiently and reducing the chances of failure.