How a monthly retainer works, and why we stopped counting hours

Fractional finance work is usually sold one of two ways. Hourly billing is honest about effort, but it leaves the owner guessing what next month's invoice will be, so questions go unasked. A flat monthly fee fixes the invoice, but it hides a question neither side likes to raise: what happens when the work grows?

For a while we answered that with a cap on included hours and a notice when a client got close to it. It was fair, and it was also a meter. Clients looked at the hours instead of the numbers, and a meter is the wrong thing to put between an owner and a controller. So we changed the model. Every package is now a monthly retainer with a fixed fee and a written scope, and the scope is what we manage, not the clock.

The flat-fee problem, from both sides

From the firm's side, an unlimited flat fee is a slow leak. A client adds a second entity, a new lender wants a covenant pack, the bookkeeper leaves and the reconciliations fall behind. Each request is reasonable. Together they can double the work for the same fee. Firms respond in one of two ways: they quietly do less, or they send a surprise invoice for "out-of-scope work". Neither is good for the client.

From the owner's side, an hourly bill has the opposite problem. You never know what a question will cost, so you stop asking questions. The controller you hired to be available becomes someone you ration.

A retainer with a written scope sits between the two. The package is fixed, the scope says exactly what it buys, and anything outside it is priced before any work starts.

The terms

These are the five terms, word for word as they appear on our packages page:

1. Your retainer covers the scope listed for your package, every month, for one fixed fee. There is no meter on the invoice.
2. Anything outside that scope is quoted in writing before it starts and appears on the following invoice. Nothing is billed without notice first.
3. If the work runs well past the scope two months running, we propose the next package with 15 days notice, or we trim the scope. Your call.
4. Packages are reviewed once a year at renewal against trailing-twelve-month revenue.
5. The fee buys a standing team and a set of outcomes, not a bank of time, so there is nothing to roll over and nothing to lose.

In practice, two of those do most of the work: the written scope, and "nothing is billed without notice first".

What the scope says

Every package has a scope you can read on one page. For Controller Essentials, the first rung, that is: Month-end close oversight, reconciliations reviewed, a six-KPI package on day 15 and a 30-minute call. For Controller + Cash, the next, it is: Monthly balance-sheet reconciliations, a 13-week cash forecast, AP/AR cadence and a quarterly lender pack on day 10. The figure for each is set in writing after the consult, and it does not move during the year.

The scope is written in deliverables, not time. Your package arrives on its day whether the close took a quiet afternoon or a long week, because a late package is our problem to solve, not yours to pay for. That is the deal a retainer makes: we carry the variation in effort, you carry none of it.

What counts as outside the scope

Three kinds of request come up most often.

• A one-time piece of work. A lender wants a pack you have never needed before. A buyer asks for three years of restated margins. We quote it as a fixed project, in writing, and start when you say so. It appears on the following invoice, and never before you have agreed to it.
• A recurring piece of work. A second entity, a WIP schedule, settlement reconciliation for a new sales channel. These are add-ons with their own fixed monthly fee, so the retainer grows by a known amount and the scope is rewritten to include it. The Job costing / WIP schedule (construction) add-on is the common one for a subcontractor.
• A question. Questions are in scope. Every package carries an ad-hoc question commitment, from two days on Controller Essentials to same day at the top of the ladder. Asking what a number means never costs anything.

When the package no longer fits

One heavy month is usually a busy month. Two in a row is usually a sign the business has outgrown its package. Term three covers that: if the work runs well past the scope two months running, we propose the next package with 15 days notice, or we trim the scope back to what the fee covers. Either way it is a decision you make with the numbers in front of you, not a line that appears on an invoice.

The ladder itself is simple. Controller Essentials is for companies at $1M - $3M of revenue. Controller + Cash covers $3M - $6M. Full controller covers $6M - $12M, and Full controller, multi-entity covers $12M - $25M. Above that the scope is custom and partner-led. Each step up adds deliverables, a faster package and a longer review call, and the step, with its figure, is always put in writing before you take it.

Why there is nothing to roll over

It is a fair question when a quiet month goes by: did I pay for work that did not happen? Term five answers it. The fee buys a standing team and a set of outcomes, not a bank of time. Your close still happens on its date in a quiet month, the forecast still goes out, and the capacity to answer your questions is reserved whether or not you use it. There are no unused hours to roll forward because there are no hours on the invoice to begin with.

What you see each month

We still log our time internally, because a firm that does not know where its effort goes cannot scope fairly. What you see each month is the package and its written scope: each deliverable, its due date and whether it has shipped, plus any add-on or project that has been quoted in writing and whether you have approved it.

The short version

You pay one number a month for a scope you can read on one page. Anything outside it is quoted first. If the package stops fitting, you hear about it with 15 days notice and a choice. And nothing is billed that you have not seen first.