Xero retainer billing
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.
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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 is the time tracking layer that feeds Xero. You need somewhere that knows this client gets 8 hours a month, how much of the period has been used, and what to push when it closes.
How retainers work in Hour Cap
On Team or Business, choose an hourly or fixed-fee retainer and its billing period. Log time against its project to measure usage. Invoice selected eligible time from completed hourly periods, or agreed fixed fees for started periods, including the current one. Review the draft in Xero before sending.
- 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
Choose the project, hourly or fixed-fee billing, the period and start date. Add an hours budget to monitor effort and configure notification recipients.
Track time normally
Log time against the retainer project. All logged hours, including non-billable work, count towards its budget. The retainer usage updates in real time; budget resets at the end of each period automatically.
Invoice the period
Choose completed hourly periods or started fixed-fee periods. Review selected hours or the agreed fee, then create a Xero draft.
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. Hourly retainers bill selected eligible entries from completed periods. Fixed retainers bill the agreed fee for started periods, regardless of usage. Track separately chargeable extra work on a separate hourly project after agreeing it with the client.
Does the retainer budget include non-billable time?
All time logged against the retainer project in the period counts towards its hours budget, including non-billable time. Client-only entries do not consume it. The billing method determines the invoice: eligible hourly time or an agreed fixed fee.
The retainer feature Xero doesn't have
Set budgets, watch usage, invoice the period. Free to start.