What is a retainer invoice?

A retainer invoice bills a client in advance, either for a month of ongoing work up to an agreed cap, or for a sum held against future invoices and drawn down as you bill. It names the period, the work it covers and the contract clause it rests on.

What is a retainer fee?

The amount a client pays to keep your firm available, usually a fixed retainer each month for a set scope or a cap of hours. The retainer agreement names the fee, what it covers, what happens to unused hours, and the payment terms.

How do I create a retainer invoice?

Start from the signed retainer agreement. Put your company name, the client's legal entity, an invoice number in your normal sequence, the period it covers, the retainer amount, the clause it rests on, the PO number, any applicable taxes, the due date and how to pay. Send it before the period starts, so the money arrives before the work.

How is a retainer invoice different from a regular invoice?

A regular invoice bills work already done. A retainer invoice bills in advance, for a period or as a balance to draw down, so it names the period and the agreement instead of hours or deliverables.

What is the difference between a retainer and a deposit?

A retainer pays for ongoing work or sits as a balance across an engagement. A deposit is a one-time share of a single project's fixed fee, paid before work starts and credited against a later invoice of that project.

Is a proforma invoice a real invoice?

No. A proforma shows what an invoice will contain if the client goes ahead or pays, and it creates no debt. The real, numbered invoice follows when the PO or the payment arrives. In the UK, HMRC advises marking a proforma "This is not a VAT invoice".

Is a retainer refundable?

It depends on the contract. A monthly fee for a month already worked is earned. An advance held against future invoices is usually refunded at the end, minus what was billed. Write the rule in the signed agreement; a word printed only on the invoice will not carry it.

How much deposit should a services firm ask for?

Small firms commonly ask for 25% to 50% of a fixed fee from a new client. Ask for enough to cover the first milestone's cost, and say in the SOW which invoice the deposit is credited against.

Should a retainer invoice include a PO number?

Yes, if the client issued one. Many payables teams cannot pay an invoice without it. Ask for the PO before the first invoice, and send a proforma if their system needs one to raise it.

Retainer invoice vs deposit vs proforma: wording, examples

Retainer, deposit and proforma invoices compared#

What	Retainer invoice	Deposit invoice	Proforma invoice
What it bills	A month of ongoing work, or an advance held against future invoices	A share of one project's fixed fee, before work starts	Nothing yet: it previews an invoice
When it goes out	Before each period, often on the 1st	On signature of the SOW	Before the deal or the PO is final
Does the client owe it?	Yes, on its due date	Yes, and work usually waits for it	No
What follows it	The next month's retainer, or invoices paid from the balance	Milestone invoices, then a final invoice less the deposit	A real invoice, numbered, once the PO or the payment arrives
The contract clause it rests on	A retainer clause: fee, what it covers, rollover, notice	A deposit clause: amount, due date, how it is applied, refund on termination	None; it repeats the quote or the SOW

The names vary by client. A large client’s payables team may call a deposit an “advance payment” or a “prepayment”. Use their word on the invoice and your contract’s word in the line description, so both sides recognize it.

What a retainer invoice is, and the two kinds of retainer#

The monthly retainer. The client pays a fixed fee each month for an agreed slice of your capacity: “up to 40 hours of design and development”, “the monthly content plan”, “on call for incidents during business hours”. You invoice it before the month starts. Hours past the cap go on the next invoice at an overage rate. This is the usual meaning in an agency or a fractional practice.

The advance retainer, or evergreen retainer. The client pays a lump sum up front. Each regular invoice is paid from it, and when the balance falls below a floor, the client tops it up. At the end of the engagement, the unused balance goes back to the client. This is the usual meaning in consulting and legal work, and the safer one for a new client you have not worked with.

Lawyers have a third meaning, the “true retainer”: a fee for being available, earned when paid, with no work owed for it. California’s rules define it that way.¹ Outside a law firm, avoid the bare word “retainer” in a contract for this reason. Say “monthly fee” or “advance payment” and define it.

For law firms only: the American Bar Association’s Formal Opinion 505 (May 2023) says a fee a client pays in advance for future legal work must sit in a trust account until it is earned, and that labeling it “nonrefundable” or “earned upon receipt” does not make it so.¹ It binds lawyers, not agencies. The lesson still carries over: the word on the invoice decides nothing; the signed clause decides.

The lines to print on a retainer invoice#

A retainer invoice carries the same fields as any invoice (your legal name, the client’s legal name, a number, the date, the due date, the PO number if they issued one) plus three that a client’s payables clerk looks for:

The period. “Retainer for November 2026”, never just “Retainer”.
The scope it covers. One line from the contract: “up to 40 hours of design and development”.
The contract it rests on. “Per the Services Agreement dated September 14, 2026, section 4.”

Example: a monthly retainer invoice (made-up firm and figures)

What	Amount
Monthly retainer, November 1 to 30, 2026: up to 40 hours of design and development, per the Services Agreement dated September 14, 2026, section 4	$8,000.00
Overage, October 2026: 6 hours above the cap at $185 per hour (timesheet attached)	$1,110.00
Total due by November 15, 2026	$9,110.00

Invoice No. FH-0112 · dated November 1, 2026 · Fernhill Studio LLC to Calder Freight Inc. · PO 4500-2231 · net 15.

Example: an advance (evergreen) retainer invoice

What	Amount
Advance payment, to be applied to invoices under SOW No. 2. Unused balance refunded at the end of the SOW, per section 6 of the SOW	$15,000.00
Total due on receipt	$15,000.00

Each later invoice then shows the draw-down, so the client can check the balance without asking:

What	Amount
Services, November 2026, per the attached timesheet: 52 hours at $175	$9,100.00
Applied from the advance (balance before: $15,000.00)	−$9,100.00
Amount due	$0.00
Advance balance after this invoice: $5,900.00. A top-up of $9,100.00 is due by December 15, 2026, to keep the advance at $15,000.00.

The retainer clause in the contract#

The invoice only repeats the contract. Put these in the signed agreement or the SOW:

Monthly retainer clause

Client shall pay Provider a monthly fee of [$8,000] (the "Monthly Fee") for up to [forty (40)] hours of the Services described in [Exhibit A] each calendar month. Provider shall invoice the Monthly Fee on the first day of each month, payable within [fifteen (15)] days of the invoice date. Hours in a month beyond the cap are billed at [$185] per hour on the next invoice, with a timesheet. Unused hours [do not roll over] [roll over to the next month only]. Either party may end this arrangement on [thirty (30)] days' written notice; the Monthly Fee for the notice period remains payable.

Advance payment clause

On signature of this SOW, Client shall pay an advance of [$15,000] (the "Advance"). Provider shall apply the Advance to each invoice under this SOW as issued. When the unapplied balance falls below [$5,000], Client shall pay the amount needed to restore the Advance to [$15,000] within [fifteen (15)] days of Provider's invoice. On the end of this SOW for any reason, Provider shall apply the Advance to all amounts due and refund any remaining balance within [thirty (30)] days.

What a deposit invoice is, and the wording on it#

A deposit invoice bills a share of a fixed project fee before the work starts: 25% to 50% is common for a small firm with a new client. It commits the client, funds the first weeks of work, and covers you if the project stops early.

What to print on it:

“Deposit”, the share and the total: “Deposit, 25% of the fixed fee of $84,000 under SOW No. 3”.
How it will be applied: “To be credited against the final milestone invoice.”
The trigger: “Due on signature of SOW No. 3. Work starts on receipt.”

Example: a deposit invoice and the final invoice that credits it (made-up figures)

What	Invoice	Amount
Deposit, 25% of the fixed fee of $84,000 under SOW No. 3, to be credited against the M4 invoice	Deposit, dated November 2, 2026	$21,000.00
M4, Live in production, per SOW No. 3	Final, on acceptance of M4	$21,000.00
Less deposit received November 4, 2026 (invoice KD-0040)		−$21,000.00
Amount due		$0.00

Here the deposit equals the last milestone, so the final invoice nets to zero and the client’s payables team sees why. When the deposit is larger than the last milestone, say in the SOW which earlier invoices take the rest of the credit.

Deposit clause

On signature of this SOW, Client shall pay a deposit of [twenty-five percent (25%)] of the fixed fee (the "Deposit"). Provider is not required to start the Services until the Deposit is received. Provider shall credit the Deposit against the [final milestone invoice]. If this SOW ends before the final milestone for any reason other than Provider's uncured breach, Provider may apply the Deposit to fees for Services performed and expenses incurred up to the end date, and shall refund any remaining balance.

A deposit is not a cancellation fee. If you want to keep money when a client walks away, put a cancellation clause in the contract that says so, with the amount. The termination for convenience article has the wording.

What a proforma invoice is, and when a services firm needs one#

A proforma invoice is a document that looks like an invoice and is marked as a proforma. It lists what you will bill if the client goes ahead or pays: the lines, the amounts, the taxes, your payment details. It has no invoice number from your sequence, and it creates no debt.

In services work, you send one in two situations:

The client needs it to raise a purchase order. Their procurement system wants a supplier document with the exact amount before it issues a PO. You send the proforma, they send the PO number, and the real invoice carries that number.
You want payment before the work starts and the client wants a document to pay against. The UK tax authority describes a proforma this way: it details what will be supplied if payment is made, and is the document against which payment is invited.² After the payment arrives, you issue the real invoice.

In the UK, write “This is not a VAT invoice” on it. HMRC’s guidance says a proforma should be clearly described as one and preferably endorsed with those words, and that it is not an accounting document for either side.² A deposit is different: in the UK, VAT on an advance payment for services falls due when you receive it or issue a VAT invoice for it, whichever comes first.³

The word comes from trade. U.S. customs rules let an importer file a “pro forma invoice” when no commercial invoice is at hand.⁴ That use has nothing to do with services billing, but it explains why some payables teams treat a proforma as paperwork rather than a bill.

Example: a proforma (made-up figures)

What	Amount
PROFORMA INVOICE. This is not a request for payment. An invoice with our number and your PO number follows on receipt of the PO.
Deposit, 25% of the fixed fee of $84,000 under SOW No. 3	$21,000.00
Valid until December 1, 2026

Which invoice to send, by situation#

What	Send
A new client, fixed-price project, you want commitment before you staff it	A deposit invoice on signature
Ongoing monthly work for a set number of hours	A monthly retainer invoice, before each month
Time and materials with a new client whose payment history you do not know	An advance retainer, drawn down by each invoice
The client's procurement cannot pay anything without a PO	A proforma first, then the deposit or retainer invoice with the PO number
An existing client who pays on time	No advance; milestone or monthly invoices on net 30

The email that sends the first invoice before work starts#

The email with the deposit or the first retainer invoice

To your contact, with their accounts payable address in Cc. Send it the day the SOW is signed.

Subject: [Project]: [deposit / November retainer] invoice [number]

Hi [Name],

Thank you for signing SOW No. [number]. Attached is invoice [number] for [the deposit of 25% / the retainer for November], [amount], due [date].

As the SOW says, [we start on receipt of the deposit / the retainer covers up to 40 hours this month], and [the deposit is credited against the final invoice / hours above that are billed next month with a timesheet].

It carries PO [number]. If your payables team needs anything else on it, such as a different entity name or address, tell me and I will reissue it the same day.

[Your name]

The email that asks payables whether they need a proforma

To the client's accounts payable contact, before you send anything with a number on it.

Subject: [Your company]: what you need to set us up for payment

Hi [Name],

We are starting work with [their team or contact] on [date], and our first invoice is [a deposit of amount].

Before I send it: do you need a proforma to raise a PO, a W-9, or a supplier form from us first? I would rather send everything at once than have the invoice wait in a queue.

[Your name]

How Tommo Closer bills the deposit and the monthly fee from the signed paper#

Tommos (tommos.ai) is a CRM whose AI agents, the tommos, take a B2B inquiry to a signed contract. On the Sign plan, Tommo Closer also gets the won deal paid.

The schedule comes from the contract. When a deal is won, Tommo Closer reads the signed SOW in the client’s folder and lays out every amount on one card: a deposit due “on signature”, a monthly fee due on the 1st of each month, a final milestone due “on acceptance of M4” with the week the SOW’s plan expects it. Each amount carries its payment term. A person accepts the card or corrects it before it counts. For work by the hour, the invoices come from the timesheets your team already sent the client.

Each invoice waits for a person. When an amount comes due, its invoice appears on a card with the PO number, the lines and the covering letter. “Make the invoice” creates it in your invoice system (Mercury today) and sends nothing. “Send” then mails the letter with the PDF and the payment link. If the client’s payables team objects, Tommo answers from the record, and when the invoice has to change, one card cancels it and makes the corrected one.

Tommos does not issue proformas, and it does not hold client money: the payment goes to your Mercury account like any other invoice.

How Tommo Closer works · Plans

Questions about retainer, deposit and proforma invoices#

What is a retainer invoice?: A retainer invoice bills a client in advance, either for a month of ongoing work up to an agreed cap, or for a sum held against future invoices and drawn down as you bill. It names the period, the work it covers and the contract clause it rests on.
What is a retainer fee?: The amount a client pays to keep your firm available, usually a fixed retainer each month for a set scope or a cap of hours. The retainer agreement names the fee, what it covers, what happens to unused hours, and the payment terms.
How do I create a retainer invoice?: Start from the signed retainer agreement. Put your company name, the client's legal entity, an invoice number in your normal sequence, the period it covers, the retainer amount, the clause it rests on, the PO number, any applicable taxes, the due date and how to pay. Send it before the period starts, so the money arrives before the work.
How is a retainer invoice different from a regular invoice?: A regular invoice bills work already done. A retainer invoice bills in advance, for a period or as a balance to draw down, so it names the period and the agreement instead of hours or deliverables.
What is the difference between a retainer and a deposit?: A retainer pays for ongoing work or sits as a balance across an engagement. A deposit is a one-time share of a single project's fixed fee, paid before work starts and credited against a later invoice of that project.
Is a proforma invoice a real invoice?: No. A proforma shows what an invoice will contain if the client goes ahead or pays, and it creates no debt. The real, numbered invoice follows when the PO or the payment arrives. In the UK, HMRC advises marking a proforma "This is not a VAT invoice".
Is a retainer refundable?: It depends on the contract. A monthly fee for a month already worked is earned. An advance held against future invoices is usually refunded at the end, minus what was billed. Write the rule in the signed agreement; a word printed only on the invoice will not carry it.
How much deposit should a services firm ask for?: Small firms commonly ask for 25% to 50% of a fixed fee from a new client. Ask for enough to cover the first milestone's cost, and say in the SOW which invoice the deposit is credited against.
Should a retainer invoice include a PO number?: Yes, if the client issued one. Many payables teams cannot pay an invoice without it. Ask for the PO before the first invoice, and send a proforma if their system needs one to raise it.

Key takeaways#

Retainer, deposit and proforma are three documents: ongoing or advance billing, a share of one project, and a preview that asks for nothing.
Define “retainer” in the contract as a monthly fee or as an advance payment, never the bare word.
Print the period, the scope and the contract section on each retainer invoice, and the share and the credit on each deposit invoice.
Write in the contract what happens to unused money and to the deposit if the work stops.
For the whole path from the signed SOW to the money, read how to get paid on time.

This is not legal, tax or accounting advice. Ask your accountant how to book money received before the work is done.

Sources#

Schwabe, Williamson & Wyatt, “ABA Criticizes Nonrefundable Fees in Formal Opinion 505” (June 8, 2023), read Oct 15, 2026
HMRC, VAT Trader Records manual, VATREC9010, “Pro-forma invoices: introduction”, read Oct 15, 2026
GOV.UK, “VAT: instalments, deposits, credit sales”, read Oct 15, 2026
19 CFR § 141.85, Pro forma invoice, Cornell Law School LII, read Oct 15, 2026

Retainer invoice, deposit invoice or proforma: which one a services firm sends