Xero retainer billing
without the spreadsheet
Track hours against a retainer budget, watch usage in real time, and push the period's invoice straight to Xero as a draft. The retainer feature Xero doesn't have.
Why retainer billing is awkward in Xero on its own
Xero is excellent at recording invoices, payments, and tax. It doesn't have a native retainer feature, because retainers aren't really an accounting concept; they're a delivery concept. Most teams end up doing one of three things:
- A repeating invoice for the fixed monthly amount. Tidy for billing, but you have no idea whether the client used 1 hour or 30 hours this month.
- A manual invoice each period summarising the work. Accurate, but it takes someone's morning to compile and someone else's afternoon to argue about.
- A spreadsheet that nobody updates until the day they realise the client overran two months ago. By then, the conversation is awkward.
The missing piece isn't in Xero, it's in the time tracking layer that feeds Xero. You need somewhere that knows: "this client gets 8 hours a month, here's the period, here's how much we've used, here's the invoice to push when we're done."
How retainers work in Hour Cap
Set up a retainer with an hours budget and a billing period. Track time against that client as you would normally. The budget shows usage in real time and auto-resets at the end of each period. When you're ready to invoice, the invoice wizard scopes to the current period in one click and pushes the invoice to Xero as a draft.
- Weekly, fortnightly, monthly, quarterly, or custom periods
- Configurable alert thresholds so you hear about it at 80%, not 110%
- Period-aware invoice creation: select all time in the current retainer period in one click
- Push to Xero as a draft with full line item detail
Setting up a retainer in three steps
Create the retainer
Pick the client, set the hours budget, choose the billing period and the period start date.
Track time normally
Log billable hours against the client. The retainer usage updates in real time; budget resets at the end of each period automatically.
Invoice the period
Open the invoice wizard, pick the retainer period, push the invoice to Xero as a draft. Review in Xero and send.
Common questions
How do I bill a retainer in Xero?
Xero itself does not have a dedicated retainer feature. The common approaches are: a repeating invoice for a fixed monthly amount; a manual invoice each period summarising hours used. Both leave you tracking usage somewhere else (usually a spreadsheet). The cleaner setup is to use a time tracker that knows about retainers and pushes the period's invoice into Xero with the hours and descriptions already filled in.
Can Xero track retainer hours?
Xero on its own does not track time against a retainer budget. Xero Projects has basic time tracking and project budgets but no recurring retainer model that resets each period. Hour Cap adds retainers as a first-class concept and pushes the resulting invoices to Xero so Xero remains your accounting source of truth.
What billing periods can a retainer use?
Hour Cap supports weekly, fortnightly, monthly, quarterly, and custom retainer periods. Pick the period that matches the client's contract. Budgets auto-reset at the end of each period and the next period's usage starts from zero.
What happens to hours that overrun the retainer?
They are still tracked. Hour Cap shows the retainer at over 100% so you and the client both have visibility. Whether to bill the overrun depends on your agreement; you can invoice just the retainer cap, the full hours used, or any subset, since the invoice wizard lets you pick which entries to include.
Does the retainer budget include non-billable time?
Only billable hours count toward the retainer usage. Non-billable entries (internal admin, training, sales calls) are tracked separately and do not consume the budget.
The retainer feature Xero doesn't have
Set budgets, watch usage, invoice the period. Free to start.