How to bill clients for hours: hourly, retainer or a prepaid block

A firm that sells its time can bill a client in three ways. Hourly in arrears means tracking the time and invoicing it at the end of the month. A monthly retainer is a fixed fee for a set number of hours, paid at the start of each month. With a prepaid block, the client pays for 20 or 40 hours up front and your work draws them down.

You choose per client, so one firm can run all three at once. Which model fits a client depends mostly on how steady their work is.

The three models side by side

Hourly in arrears

You invoice everything unbilled at the end of the month, and the client pays on your terms.

It’s the easiest model to start with, because the client pays only for work that has been done and there’s nothing to agree on up front beyond the rate. It suits new clients, one-off projects and work whose size nobody can predict.

The drawback is how long you wait for the money. Say the work is done on 2 September, you invoice on 1 October, and your terms are net 30. The money is due on 31 October, nearly two months after the work, which across a team means carrying one to two months of payroll before the client pays.

The client also doesn’t know the size of the bill until the invoice arrives, and a bill bigger than they expected gets questions that delay payment. Answer them in advance by giving each entry or task its own line with the date, who did the work, what they did, the hours and the rate. A client who rebills your time, such as a law firm that hires a legal support firm, needs that detail anyway to bill its own client.

A monthly retainer

The fee is billed at the start of the month and is often charged automatically to a card or bank account.

You’re paid a predictable amount before the work, and the client gets a known cost and a team that has set time aside for them. Use it for work that comes every month, such as bookkeeping or ongoing operations support.

Before the first invoice, write down:

• The number of hours the fee covers each month, based on what the client used over the last few months if you have that data.
• What happens to unused hours. “Use it or lose it” is the simplest rule, but after a quiet month the client has paid for hours they didn’t use. Rolling over forever means you can end up owing a client months of work at once, so a rollover limited to something like three months sits between the two.
• The overage rate, which is what you charge for work beyond the allowance. Bill it as separate lines on the next invoice and never fold it into the fee.
• How the client changes or stops the plan. A bigger plan can start right away, while a smaller one usually starts at the next renewal.

Each month the client needs to see the hours used, the hours left, the hours carried over and the entries that used them. Without that, all they see is a fixed fee, and they have to trust that it was earned.

A prepaid block of hours

When the block runs low, the client buys another. Unlike a retainer, the block isn’t tied to a month, so it fits work that comes in bursts, such as litigation support in the weeks before a trial or a consultant hired for one project.

For cash this is the strongest of the three, because you’re paid before the work, as you are on a retainer, and in larger amounts. If you keep accrual books, the money for hours not yet used is usually recorded as deferred revenue until they are used, so ask your accountant how to record it.

Give the hours an expiry date and print it where the client will see it, because without one, old hours stay on your books for years.

Tell the client when the balance drops below a set level, such as five hours, and say in the same message how to buy the next block. If buying more hours means an email to you and an invoice back, the block can run out in between, and then the work either stops or continues unbilled. Decide in advance what happens at zero and put it in the agreement: either work stops until they buy more, or it continues and is billed hourly as overage.

Prepaid hours work differently for a law firm, because fees paid to a lawyer in advance are client money. ABA Model Rule 1.15(c) says a lawyer must deposit them in a client trust account and withdraw them only as they are earned (read 13 Oct 2026). If you’re a law firm, check your state bar’s rules before you sell blocks of hours.

The mechanics, whichever model you use

Track time against the right client and project as it happens, because time rebuilt from memory on Friday comes out short and vague.

An invoice needs a number, a date, the billing period, one line per entry or task, the rate and the total. For a retainer or a block, add the hours remaining.

Payment terms depend on what is being paid for. Net 15 or net 30 is normal for work already done. Hours bought in advance are usually due on receipt. Make the reminders automatic, so that nobody on your team has to remember to follow up: one before the due date, then one every week or so after it, stopping as soon as the invoice is paid.

You can also mix models for one client. Keep the work a retainer doesn’t cover on its own project, so that it’s billed hourly and never uses the client’s hours. Time that does come off their hours was paid for with the retainer, so it isn’t invoiced a second time.

How Timebun handles each model

We built Timebun for firms that sell their time. Our first customer, Lev Legal, is a legal support firm that sells blocks of hours to law firms. It moved to Timebun from Harvest. Each client in Timebun has a billing setting with two options, Retainer or hourly and Hourly only.

For hourly invoicing, you choose a client, a period such as Through end of last month, and the projects to bill. Timebun drafts the invoice in Stripe with one line per entry, showing the date, project, person and description. You review it and send it. Timebun then emails it to the client’s invoice recipients with a Pay invoice button and a PDF link. You set the payment terms and the reminder schedule: one reminder before the due date, then reminders after it at an interval you choose, up to a limit you choose. Timebun checks Stripe before each reminder, so a client who has just paid doesn’t get one.

Retainers are sold as plans. A plan has hours per period, a price and a billing interval, which is monthly, quarterly or yearly. It also sets what happens to unused hours: they expire with the period, roll over for 3 or 12 months, or never expire. The client is charged each period through your own Stripe account, and the hours are added when the payment clears. Each finished entry on the client’s retainer projects comes off those hours. Tracking isn’t blocked when they run out. The time past that point is overage, billed on the next invoice at the client’s hourly rate, or at the plan’s own rate if the client has none. An invoice for time worked also shows the hours the client has left.

A prepaid block is a bundle with hours, a price and an expiry of 3, 6 or 12 months from payment, or no expiry. The client buys one from their portal, or you invoice them for it from their client page. The invoice is due on receipt. The hours are added once it’s paid in full.

You invite each client’s people to the client portal, where they see their hours, their entries and their invoices, and can pay or buy more hours without asking you. The low-hours warning and the monthly statement of hours are described in how to answer “how many hours do we have left?”.

Retainers, prepaid blocks and the client portal are on every plan, including Starter at $15 a seat a month.

FAQ

What is the best way to bill clients for hours?

It depends on how steady the work is. Bill hourly for new or irregular work, use a retainer for work that comes every month, and sell a prepaid block for work that comes in bursts. The choice is per client, so you can use all three at once.

How do I bill a client monthly?

Pick one billing date and keep to it. On that date, invoice last month’s time if you bill hourly, or this month’s fee if the client is on a retainer. Put the payment terms on the invoice and let reminders go out automatically.

Should unused retainer hours roll over?

That’s your choice, as long as it’s written into the agreement. The options are “use it or lose it”, a rollover limited to a few months, or a rollover with no end date. I’d start with a limit of three months, because it evens out a quiet month without leaving you owing hours indefinitely.

How do I bill for hours beyond a retainer or a block?

Agree on an overage rate before you start, and bill the extra hours as separate lines on the next invoice. Warn the client while they still have hours left, so the overage isn’t a surprise.

How should a consultant bill clients?

In the same three ways. Ongoing advisory work suits a retainer. A defined project suits hourly billing, or a prepaid block sized to the project. Track the time either way, because that’s how you find out whether the price was right.

What payment terms should I use?

Net 15 or net 30 for work already done, and due on receipt for hours the client buys in advance.