Materio offers four different ways to bill your customers: retainers, deposits, invoices, and credits.
The correct way to bill in Materio depends on the specific accounting methodology your firm is set up for. Review this article together with your accountant to determine which approach to billing is right for your firm.
Retainers
Retainers allow you to collect general-purpose pre-payments from your clients. You can give a retainer a name (e.g. 'January Hours' or 'Prepaid Design Services') indicating a general intent for the money, but retainers are inherently flexible and can later be spent towards anything in the project.
Retainers are held as liability and only work with accrual-basis accounting. Retainers do not count as income, do not affect P&L, and do not trigger sales tax reporting. Firms using cash-basis accounting should not use Materio retainers.
Deposits
Deposits allow you to collect pre-payments from your clients that are earmarked for specific items in your project.
Deposit funds are reserved only to be spent towards specific pre-determined items, making them more precise but less flexible than retainers. Deposits are a good way of collecting pre-payments if you or your client need to know in advance exactly what each dollar is for.
Deposits are held as liability and only work with accrual-basis accounting. Deposits do not count as income, do not affect P&L, and do not trigger sales tax reporting. Firms using cash-basis accounting should not use Materio deposits.
Though deposits earmark money for specific items, this can still evolve as quantities and pricing change during the course of a project:
If an item price or quantity decreases, Materio lets you convert the remaining deposit balance into a credit that you can flexibly spend towards something else.
If an item price or quantity increases, Materio helps you collect the remaining balance from your customer, either with another deposit or on the final invoice.
Invoices
Invoices are the standard way to bill and recognize revenue in Materio. Invoices count as income, affect P&L, and trigger sales tax reporting.
Invoices are always the final stage of billing for a project. Every dollar on every retainer, deposit, and credit must eventually be applied as payment towards an invoice before your project's billing can be considered complete.
Credits
Credits allow you to designate and hold funds that you owe back to your client. Typical uses for credits are to compensate if the client was over-invoiced, if the client paid too large of a deposit on an item, or if an item sustained damage, etc. Credits for over-invoiced items count as negative income, affect P&L, and trigger negative sales tax reporting. Credits for over-deposited items do not.