How Do You Create an Invoice That Works for Retainer and Project Fees?

Understanding the “Retainer + Project” Reality

Many service businesses don’t fit neatly into a single pricing model. You might charge a monthly retainer to cover ongoing access, support, and availability, while also billing separate project fees for defined deliverables like a website redesign, a brand refresh, a marketing campaign, or a software feature build. That hybrid approach is smart: retainers stabilize cash flow, and projects ensure you’re paid fairly when the scope expands beyond routine work.

The problem is invoicing. If your invoices aren’t structured clearly, clients get confused. They ask what’s included in the retainer, why an extra project charge is necessary, whether unused hours roll over, and how you’ll bill changes. Confusion slows approvals, creates friction, and can delay payment. A well-designed invoice prevents those issues by explaining the logic of the fees, separating recurring charges from one-time work, and documenting exactly what the client is paying for.

This article shows you how to create an invoice that works for both retainer and project fees: what to include, how to format it, what language to use, and how to avoid the most common disputes. Along the way, you’ll see how invoice24 makes hybrid invoicing easy—because a free invoice app is only useful if it supports real-world billing patterns, not just simplistic one-off invoices.

What Makes a Hybrid Invoice “Work”?

An invoice “works” when it gets paid quickly and predictably, without repeated questions or revisions. For retainer + project billing, a working invoice does four things:

1) Separates recurring and one-off charges. A retainer is an ongoing service arrangement. A project fee is tied to a specific outcome or milestone. These should be distinct on the invoice so the client can understand what is repeating and what is not.

2) Connects each charge to an agreed scope. The invoice should match the client’s contract, proposal, statement of work, or email agreement. It should remind the client what they approved.

3) Prevents scope confusion. Retainers can be “access-based” (availability) or “time-based” (hours). Projects can be fixed-fee or milestone-based. Your invoice should spell out how you measure and bill work, so “why am I being charged twice?” never comes up.

4) Helps the client approve internally. Many clients need to submit invoices to finance or procurement. Clear line items, dates, references, tax info, and payment terms reduce back-and-forth and get you paid faster.

invoice24 is built for that reality: it lets you create clean, client-friendly invoices, add detailed line items, set due dates and payment terms, apply taxes and discounts where needed, and keep everything consistent across recurring retainers and project milestones—without forcing you into a rigid template that doesn’t match how you actually work.

Choose the Right Structure: One Invoice or Two?

A key decision is whether to combine the retainer and project fees on one invoice or separate them into two invoices. Both approaches can be correct. The best choice depends on the client’s expectations and internal accounting.

Option A: One combined invoice. This is useful when the retainer and project work occur in the same billing period, and the client prefers a single payment. It can reduce administrative overhead and simplify your accounts receivable.

Option B: Two separate invoices. This is useful when the retainer is billed on a predictable cadence (e.g., first of the month), while project fees are billed by milestone or at different times. Some clients also prefer separate invoices because retainers and projects may go to different cost centers or budgets.

If you’re unsure, start with a combined invoice for simplicity, then switch to separate invoices if the client’s finance team asks for it. Either way, the formatting principles are the same: separate sections, clear descriptions, and strong references to what the charges represent.

In invoice24, you can handle either approach without reinventing your workflow. You can create a single invoice with multiple sections, or generate separate invoices quickly, using consistent branding and saved client details. That consistency matters when you’re invoicing regularly and don’t want errors or omissions to creep in.

Define the Retainer Line Item So It’s Not Misunderstood

The most common retainer dispute happens because “retainer” can mean different things to different people. Your invoice must make it unambiguous. There are two primary retainer types, and your line item should reflect which one you’re using.

Access-Based Retainer (Availability Retainer)

An access-based retainer pays for your availability, priority response, and ongoing partnership. It may include some deliverables, but it’s not necessarily tied to hours. Clients are paying to secure your capacity.

A strong invoice description might look like this:

Retainer – Monthly Partnership (January 2026)
Includes priority support, strategic advisory, and reserved capacity for ongoing requests. Response time target: 1–2 business days. Covers ongoing service coordination and access to the team.

This description signals that the retainer is about access and priority, not a “bucket of hours” the client can demand at will.

Time-Based Retainer (Hours Retainer)

A time-based retainer provides a defined number of hours, tasks, or credits per period. This is popular for marketing, design, development support, and consulting.

A strong invoice description might look like this:

Retainer – 20 hours (January 2026)
Covers up to 20 billable hours of services as defined in the agreement. Work includes campaign optimization, reporting, and ongoing improvements. Additional hours billed at £X/hour with prior approval.

Notice the last sentence: it prevents surprises and sets the rules for overages.

invoice24 makes it easy to write these clear descriptions and reuse them. If you bill the same retainer each month, you can keep the wording consistent, update the billing period, and avoid accidental changes that cause client questions.

How to Present Project Fees Without Clashing With the Retainer

When a client pays a retainer, they often feel like “the work is covered.” That’s why project fees must be positioned as separate and specific. Your invoice should present project fees in a way that:

• Names the project clearly (so it’s obvious it’s a distinct scope)
• References milestones or deliverables (so the client knows what they’re paying for right now)
• Shows dates or a billing period (so it aligns with their records)
• Mentions prior approval (so it’s clearly not a surprise)

Here’s a simple and effective model:

Project Fee – Website Redesign (Milestone 2: Visual Design)
Milestone 2 deliverables: homepage + 5 core templates, responsive design, design system components, and handoff notes. Approved on 10 January 2026. Amount due per milestone schedule.

That one description answers most finance-team questions in advance. If the client is paying an upfront deposit, say so. If they’re paying by milestone, name the milestone. If it’s a fixed project fee, clarify whether the invoice is a partial payment or the full amount.

With invoice24, you can add as many line items as you need and keep project billing organized. If you prefer milestone billing, you can create each milestone as its own line item or its own invoice—either way, the client sees an instantly understandable structure.

Use Sections: “Retainer” and “Project Work”

If you’re combining charges on one invoice, don’t just list everything in a single column of line items. Create obvious sections so the client’s eye understands the invoice at a glance.

A practical structure looks like this:

Section 1: Retainer
One line item for the monthly retainer, clearly labeled with the billing period.

Section 2: Project Work
One or more line items for project fees, each labeled by milestone or deliverable.

Optional Section 3: Additional Approved Work
If you have overages or add-ons that are outside both the retainer scope and the project scope, list them separately as “Additional Approved Work” to prevent the perception that you’re sneaking extra charges into the project.

Even if your invoice template doesn’t support literal section headers, you can simulate sections by using deliberate line item titles and spacing. invoice24 is flexible enough that you can format and label line items in a way that reads like clean sections, which is exactly what clients need.

Make Your Billing Periods Visible and Consistent

Retainers are recurring, so the billing period must be obvious. Project work is often milestone-based, so the relevant timeframe should be clear as well. This reduces confusion and prevents the “didn’t we pay this already?” email.

For retainers, always include the month (or date range):

Retainer – February 2026 or Retainer – 01 Feb 2026 to 28 Feb 2026

For projects, include milestone identifiers and, if helpful, the service period:

Project Fee – CRM Integration (Milestone 1)
Service period: 05 Jan 2026 to 20 Jan 2026

The key is consistency. If you label retainers by month, always do that. If you label projects by milestone number, always do that. Consistency increases trust and reduces the mental load for whoever approves your invoice.

invoice24 supports clean invoice numbering and date fields, so you can keep your billing cadence tidy and professional. And because it’s built as a modern free invoice app, you don’t have to compromise on clarity just because you aren’t paying for enterprise software.

Describe What’s Included in the Retainer—But Keep It Short

Clients want clarity, but nobody wants a wall of text on an invoice. The trick is to include enough information to prevent disputes, while keeping the invoice readable.

Use a “headline + bullet-like phrasing” approach within the line item description:

Retainer – Ongoing Marketing Support (March 2026)
Includes: monthly planning call, campaign monitoring, reporting, and up to 10 content edits. Excludes: new campaign builds and landing page redesigns (billed as project fees).

That last sentence is powerful. It gently reminds the client that some things are outside the retainer and explains why project fees exist.

invoice24 helps here because you can standardize these descriptions and avoid rewriting them every month. That way, your “includes/excludes” logic stays consistent across invoices, which lowers the chance of an argument later.

Show Project Scope and Change Orders in Plain Language

Project fees cause friction when scope changes midstream. If you do change orders (and most professionals should), the invoice is a good place to document them. This doesn’t mean you should negotiate scope on the invoice—scope should be agreed in writing beforehand—but you can reference the approved change.

For example:

Project Add-on – Additional Landing Page (Change Order #2)
Added per request on 14 January 2026. Includes design + build of one additional landing page template and responsive QA. Approved rate: £X fixed fee.

This line item prevents “we didn’t approve that” disputes. It also makes your invoice easier for finance teams because it looks like a normal, documented expense rather than an unexplained extra charge.

In invoice24, you can keep add-ons cleanly separated from the retainer and main project milestones, so the invoice tells a story: baseline agreement, agreed milestones, and any approved expansions.

Handle Deposits, Prepayments, and Retainer Credits Correctly

Hybrid billing often involves money moving in different ways: deposits before a project begins, prepaid retainers, or crediting a portion of the retainer toward project fees. If you use any of these methods, your invoice should show the math clearly.

Project Deposit

A deposit invoice should state what the deposit applies to:

Project Deposit – Mobile App UI Refresh
Deposit to commence work. Applied toward total project fee of £X. Remaining balance invoiced across milestones.

Prepaid Retainer

If the client pays the retainer upfront for multiple months:

Prepaid Retainer – Q1 2026 (Jan–Mar)
Covers monthly partnership retainer for January, February, and March 2026.

Credit Retainer Toward Project

Some agreements allow part of the retainer to be credited toward a project fee. If so, show it as a separate line item so the client sees the discount or credit.

Project Fee – Analytics Dashboard (Milestone 1) – £X
Retainer Credit Applied – (–£Y)
Subtotal Due for Milestone 1 – £(X–Y)

That transparency builds trust. It also helps the client justify the spend internally because the invoice demonstrates you’re honoring the agreement.

invoice24 supports discounts and adjustments so you can represent credits cleanly without hacking the invoice layout. The invoice remains professional and easy to audit.

Include Overages Without Starting a Fight

If your retainer is time-based, overages are common. The key is to present overages as a normal and expected part of the agreement, not a surprise fee.

Best practices for overage line items:

• Label the hours clearly (e.g., “Retainer Overage – 3.5 hours”)
• Reference the date range so it doesn’t look random
• State the rate if your invoice shows unit pricing
• Mention approval if you require it

Example:

Retainer Overage – 3.5 hours (Jan 2026)
Additional work beyond included retainer hours. Work performed: 18–22 January 2026. Billed at agreed rate £X/hour. Approved via email on 17 January 2026.

That’s not confrontational; it’s documented and calm. It’s also difficult to dispute because the information is complete.

invoice24 helps you present overages neatly: you can itemize hours, add descriptions, and keep them distinct from project milestones, so clients can see what is retainer, what is project, and what is extra.

Taxes, VAT, and Compliance: Don’t Let Accounting Slow You Down

Many payment delays aren’t about the work—they’re about compliance. If you’re in a region where VAT or sales tax applies, or if the client requires specific invoice details, missing information can stop your invoice from being processed.

Make sure your invoices include:

• Your legal business name and address
• The client’s billing details
• An invoice number (unique and sequential is ideal)
• Invoice date and due date
• Tax/VAT registration number if applicable
• Tax breakdown (rate and amount), if required

Also consider whether retainers and project fees have different tax treatments in your jurisdiction. Some regions treat deposits differently, or require specific language for VAT. If you’re unsure, get professional accounting advice and then bake that structure into your invoices.

invoice24 is designed to produce professional invoices with the standard fields businesses expect, helping your invoices move through approval pipelines smoothly. And because it’s a free invoice app, it’s an easy upgrade from DIY spreadsheets that often miss critical details.

Payment Terms That Fit Hybrid Work

Hybrid billing can trigger confusion about when payment is expected. Retainers are usually due in advance (or at the start of the period). Projects might be due on receipt, Net 7, Net 14, or tied to milestones. Your invoice should state the terms clearly, and they should match your agreement.

Common approaches:

Retainer: Due on receipt or due before the service period begins.
Projects: Due on milestone completion, or due on receipt per milestone invoice, often Net 7 or Net 14.

A simple, effective invoice note might read:

Payment Terms: