IN a side conversation with the wonderful Dawn (of A Virtual Assistant in Paradise), she said: "Instead of working primarily on retainer you might want to consider taking an initial deposit as well. I know a few VAs that work hourly and take a deposit instead. "
I thought that subject was worth opening up here for everyone else to pipe in & also to learn from.
My question back to her was: What exactly is the difference between a retainer & a deposit? (I was kind of thinking that they were the same - payment ahead for work I had not done yet.)

Hi ReAnn
This is a great question and one that comes up again and again, actually, so you're not alone.
Check this forum section on Billing Policies for a few threads that might provide some insight for you.

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ReAnn,

My thinking would be:

A Retainer client is client who books so many hours a month with you and pays in advance.

A Deposit would be from a client who may have only one project and they pay a percentage (%) of the quote total up front/in advance.

So yes in a way you are correct when you say

Quote:

(I was kind of thinking that they were the same - payment ahead for work I had not done yet.)

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Vicky
www.c-vas.eu

A deposit is accepted in advance of work to be done and is worked off until the deposit amount is eventually completely billed. (Think "pay as you go" cell phone service.)

A retainer is payment in advance for a specific number of hours per week/month, etc. If the agreed upon number of hours is not used by the client during the specified time period the balance of the retainer is not carried forward into the next time period. (Think contract cell phone service with no rollover of monthly minutes.)

I hope that makes the difference clear to you.

Karen

I'd just like to add that our deposits are taken against a certain period of regularly paid invoices (not worked off over a period of time, per se) and are returned to the (new) client after that time has passed. It's an insurance policy against unpaid invoices until the relationship has developed.

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Re Ann I am sorry I am late responding, but I think everyone pretty much explained as I would have! Do you need any further clarification?

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Dawn Riley
A Virtual Assistant in Paradise
Our business is about making yours better

Originally Posted by Tess

I'd just like to add that our deposits are taken against a certain period of regularly paid invoices (not worked off over a period of time, per se) and are returned to the (new) client after that time has passed. It's an insurance policy against unpaid invoices until the relationship has developed.

Tess - I want to make sure I understand you: You hold the deposit, kind of like a rental deposit on an apartment, in a seperate account. Then the client pays each month's billing as it comes due with out touching or referring back to that deposit unless there is a problem or the relationship ends?

P.S. Sorry...let me finish that thought...(I hit submit too fast) So I could take a deposit of say one months rent up front orone months estimated work, whish I would hld in a side account untill later PLUS a retainer of the 1st months work paid up front, work that retainer off, bill the 2nd month's retainer, get paid for that, work that retainer off, bill the 3rd month's retainer, etc etc etc...... Never touch the deposit until there is a biolling problem or the relationship ends. Do I have the theory correct now?

ReAnn,

I think you'd want to not hold the deposit forever, but just until the client establishes a good payment record.

But if you're doing a retainer, they're paying you in advance anyway so I don't see why you'd need a deposit. I see a deposit being more for hourly work, not for retainer clients.

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Amanda Moore
Virtual Assistant
VagabondetteVA Blog

... except Tess is suggesting (I think) that a deposit escrowed even with a retainer account helps ensure against non-payment, because you can work more hours in a month than the retainer pays for ... your client can end up owing more than they've paid for through their monthly installment. So maybe in that case, you'd do well to have a deposit for backup (?)

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Mary H. Ruth/Virtual Writing & Communications
http://www.writingVA.com