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A billable-hours-versus-retainer calculation answers one practical question: does the approved work fit inside the retainer amount for the billing period? Start with billable time, billing rates, and the retainer value. The output is the covered amount, the unused retainer balance, or the overage that needs approval, write-down, or invoice treatment under the client agreement.
This comparison matters when a fixed monthly retainer covers a defined amount of service, but actual work varies. If the agreement says overages are billed separately, the calculation supports an added invoice line. If the agreement says the retainer is capped, the same calculation identifies write-downs or scope discussions before the period closes.
The core formula is approved billable hours multiplied by the applicable rate, then compared with the retainer. With multiple rates, calculate each role or service line separately before adding the results. A simple structure is: `(hours × rate) + (hours × rate) = billable value`, then `billable value - retainer = overage` when the result is positive.
For example, a client success retainer includes 22 approved advisory hours at $175 per hour and 11 approved implementation hours at $125 per hour. The billable value is $3,850 plus $1,375, or $5,225. Against a $4,500 retainer, the overage is $725 if the contract allows additional billing beyond the retainer.
A retainer comparison is not the same as a payment-status calculation. The retainer amount shows agreed coverage for a billing period or engagement. The billable-hours total shows the value of approved work. Collection shows whether the client has paid. Keep these separate so utilization, realization, collection, and effective billing rate do not collapse into one misleading number.
The common mistake is treating a retainer as automatically earned for every hour logged. If 40 hours are worked but only 33 are approved as billable, compare the retainer to the 33 approved billable hours. Write-downs, excluded internal work, and non-billable tasks change the billable value before the retainer comparison begins.
For U.S. professional billing, there is no federal VAT/GST or single national sales-tax rate. Sales tax treatment is state and local, and some services are not taxed. Add a jurisdiction-specific tax input only when the billed service is taxable. For example, Texas taxable services use a 6.25% state rate, with local rates up to an 8.25% combined maximum.
Payment timing is also separate from the retainer math. For federal-agency vendor invoices, Prompt Payment rules generally use the contract date, accepted discount terms, an accelerated-payment rule, or 30 calendar days after receipt of a proper invoice. For U.S. lawyers, ABA Model Rule 1.5 requires the scope of representation and the basis or rate of fees and expenses to be communicated in writing for new client-lawyer relationships, subject to the rule's limited low-cost exception.
A one-off calculation is enough when you have a short time list, one retainer amount, and a clear contract rule for overages. It gives a fast answer for a single invoice review, scope check, or client conversation. It is not enough when multiple people, rates, write-downs, approvals, or billing periods affect the final number.
A managed workflow becomes necessary when retainer coverage needs an audit trail. Everhour can keep billable and non-billable time in reports, group entries by client, project, task, or person, and export the data for review. That gives the billing owner a durable record before sending retainer usage or overage details to the client.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Calculate the approved billable value first, then compare it with the retainer amount. Use `approved billable hours × rate` for each rate category, add the results, and subtract the retainer. A positive result is an overage if the contract allows overage billing. A negative result is unused coverage or margin, depending on the agreement.
A retainer and a fixed fee are not automatically the same. A retainer often funds or covers work for a period, while a fixed fee can price a defined scope regardless of hours. The contract decides whether unused retainer value rolls forward, expires, is refunded, or stays earned after the period closes.
When billable work exceeds the retainer, the next step depends on the client agreement. The excess can become an overage invoice, require client approval, trigger a write-down, or signal that the scope has exceeded the service level. Do not invoice the excess unless the agreement supports overage billing.
Apply tax after determining the taxable billed amount, not before calculating the billable value. In the United States, there is no federal VAT/GST or national sales-tax rate for professional time. Use a state and local tax input only when the specific service is taxable in the relevant jurisdiction.
Retainer realization falls below 100% when the approved billable value is reduced before billing or when worked time cannot be charged under the agreement. Common causes include write-downs, non-billable tasks, capped overages, missed approvals, and time entered after the billing period closed. The gap should be visible before the invoice is issued.
Everhour Reporting lets admins build reports with 45+ columns, filters, grouping, date ranges, and exports. For retainer reviews, reports can show billable time, non-billable time, billable amount, cost, project, client, member, task, and invoice status in one billing review view.
Everhour Billing & Invoicing can turn uninvoiced billable time and expenses into invoices, calculate amounts from rates and time, and exclude non-billable work. Invoice lines can be grouped by project, task, person, date, or other available breakdowns to match the retainer review format.
Track approved billable work, compare it with retainer coverage, and export billing-ready reports. Everhour gives teams the reporting trail behind retainer usage and overage decisions.
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