Holding client deposits and retainers safely

Client money often arrives before you have earned it. A project deposit lands when the engagement is signed, an ongoing support retainer is paid at the start of each period, and in both cases the cash is in your account before the corresponding work is delivered. That feels like a comfortable position, and it is, right up until you have spent the money and the work it was meant to cover does not happen as planned.

This guide is about money you receive from clients, not deposits you pay to suppliers. The core idea is simple but easy to get wrong: an upfront deposit or a retainer is not revenue the moment it arrives. It becomes yours as you deliver against it, and treating it that way protects you when scope changes, a client pauses, or a refund is owed.

Money received before it is earned

A deposit and a retainer share one feature: you hold the cash before you have done the work. With a project deposit, the client is committing to the engagement and funding its early stages. With a support retainer, the client is paying in advance for a block of capacity or hours over a coming period. In both cases your obligation to deliver runs alongside the cash you are holding.

That makes the money conditional rather than free. If the project is rescoped, paused or cancelled, or if the retainer hours go unused under terms that allow a refund or carry-over, part of what you hold may have to be returned or re-earned. The cash being in your account does not by itself make it yours to spend.

The hole that spending it early creates

The trap is treating a deposit or retainer as ordinary operating cash the day it arrives. It inflates your balance, makes a quiet month look healthy, and tempts you to commit to costs against money you have not yet earned. Then the situation that the deposit was supposed to protect against actually happens, and you discover the cushion has already been spent.

If a client pauses a project after you have spent their deposit, you owe delivery you can no longer easily fund, or a refund you cannot easily make. If a retainer client leaves with unused hours that your terms say carry over, you have already consumed money that was promised to future work. The hole is not a billing problem; it is a cash problem, and it appears exactly when you are least able to absorb it.

Drawing it down as you earn it

The discipline is to hold deposits and retainers separately from your operating balance and release them deliberately as you deliver. For a project deposit, that means recognising it against the milestones or stages it was meant to fund, moving it into spendable cash only as that work is done and accepted. For a retainer, it means treating each period's payment as earned in step with the hours or capacity actually used.

Holding the money apart keeps your real position honest. Your operating balance shows what you have genuinely earned and can commit, while the held amount shows what you still owe in delivery. That separation makes refunds and pauses far less painful, because the money to honour them was never spent, and it stops a string of fresh deposits from disguising a thin underlying cash position.

How Altery fits

Holding client money apart from your own is exactly the kind of separation Altery's accounts are built for. You can ring-fence a deposit or a retainer in its own pot, distinct from your operating balance, and draw it down deliberately as you earn it rather than letting it inflate your spendable cash. Real-time balances then show two honest numbers side by side: what you have genuinely earned, and what you are still holding against future delivery.

If a client pays a deposit in USD, EUR or GBP, a multi-currency account lets you hold a foreign-client deposit in the currency it arrived in, so you are not forced to convert before you know whether the work, or a possible refund, will proceed. That keeps the held amount whole until it is earned. Altery is not a bank and provides general information, not advice; how you recognise deposits and retainers and handle refunds is something to confirm with your own adviser and your client contracts.

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