Retainer Invoice in Zoho Books – Complete Guide

A Retainer Invoice in Zoho Books is used to collect advance payments from customers before delivering goods or services. It is commonly used in consulting, IT services, AMC contracts, projects, and professional services.

Instead of billing after work is completed, you first collect a retainer (advance) and later adjust it against final invoices.

What is a Retainer Invoice?

A Retainer Invoice is:

  An advance payment request
  Not counted as revenue immediately
  Recorded as a Customer Credit / Liability
  Adjusted later against actual invoices

Step-by-Step: Create Retainer Invoice in Zoho Books

Step 1: Enable Retainer Invoices

1. Go to Settings ⚙ → Preferences → Sales

2. Enable Retainer Invoices

3. Click Save

Step 2: Create Retainer Invoice

1. Go to Sales → Retainer Invoices

2. Click + New

3. Select Customer

4. Enter:

   • Retainer Amount

   • Description (e.g., ERP Implementation Advance)

   • Due Date

5. Save & Send

Example: Retainer Amount: AED 10,000

Description: Advance for Odoo Implementation

Step 3: Receive Payment

1. Open Retainer Invoice

2. Click Record Payment

3. Enter:

   • Payment Mode

   • Bank/Cash Account

4. Save

Now Zoho records this as Customer Credit (Liability)

Step 4: Create Final/Regular Invoice

After providing service:

1. Go to Sales → Invoices → + New

2. Create normal invoice

3. Add services/products

4. Save

Example: Total Service Value: AED 15,000

Step 5: Apply Retainer Credit

1. Open the Final Invoice

2. Click Apply Credits

3. Select available Retainer Credit

4. Apply amount

5. Save

  Remaining amount = Payable by customer
  Used amount = Revenue recognized

Accounting Treatment in Zoho Books

When Retainer is Received:

(Liability – Not Income)

When Applied to Invoice: