By Adrian Cole, billing-operations support analyst with 9 years of experience managing client retainers and payment corrections
Last reviewed: July 22, 2026
FreshBooks business users sign in to create retainers, track time against prepaid budgets, apply client credits, and process eligible refunds. Clients normally receive retainer invoices and payment links from the business rather than using the owner’s account login.
This independent guide is not affiliated with FreshBooks.
Start with the transaction type. A retainer payment, unused retainer time, client credit, overpayment, and refund may involve the same client, but they are recorded and corrected in different ways.
What FreshBooks Retainers Are
FreshBooks retainers let a service business bill a client a fixed amount upfront while tracking time against the remaining retainer balance. The retainer generates invoices on a selected schedule, and eligible time entries are deducted from the available budget and marked as billed.
Retainers are available on trials and eligible Plus, Premium, and Select plans. Each client can have only one active retainer at a time.
A retainer is not the same as a recurring template.
A recurring template works well for repeating products or services with adjustable line items. A retainer is designed around reserved time or a defined service budget billed in advance, with optional excess-hour billing after the period ends.
Choose the structure before collecting payment. Skip a retainer when the business mainly needs to rebill products, expenses, or changing service combinations.
Choose the Correct FreshBooks Route
| Your task | Correct starting point |
|---|---|
| Manage the business account | FreshBooks login |
| Recover account access | Forgot Your Password? |
| Create or edit a retainer | Invoices > Retainers |
| Review time against a retainer | Retainer overview or Retainer Summary |
| Bill excess hours | Retainer’s excess-time invoice action |
| Apply an existing client credit | Invoice’s More Actions > Add a Payment |
| Review remaining client credit | Credit Balance report |
| Refund an eligible online payment | Invoice or Payments section |
| Correct a manual refund | Update the payment record manually |
The current FreshBooks login supports email and password access, Google sign-in, Apple sign-in, Forgot Your Password?, and Can’t Log In?
Do this first: confirm that the correct business and client are open. Skip payment changes until the invoice, retainer, and transaction have been matched.
Create a Retainer Carefully
A retainer can be created from the Retainers subsection, the Dashboard’s Create New menu, or a client’s Retainers tab. The setup asks for a start date, billing period, fee per period, hours per period, excess-hour rate, next issue date, invoice count, and delivery option.
FreshBooks currently supports weekly, monthly, yearly, and custom retainer periods. The business can generate invoices indefinitely or specify a limited number, then choose whether invoices are sent automatically or saved as drafts for manual review.
Review every term before activation:
- client;
- start date;
- period;
- fee;
- included hours;
- excess rate;
- invoice frequency;
- automatic or manual delivery;
- payment settings.
One wrong field can repeat across several periods.
The retainer start date also determines the earliest date from which time can be tracked against it. When editing later, the start date cannot be moved into a period where a retainer invoice has already been generated.
Priority one is the first invoice. Skip automatic delivery until one draft has been checked from start date through total.
Track Time Against the Correct Retainer
FreshBooks can apply time to a retainer through an associated project or through an individual time entry. When a project is linked, new time entries for that project can be applied automatically. For individual entries, the user checks Apply to Retainer while recording the time.
This setting deserves attention.
FreshBooks says time entries associated with a client who has an active retainer are automatically applied unless the user clears the Apply to Retainer checkbox. That can cause unrelated work to consume the retainer budget when the client has several active engagements.
Check the project and checkbox before saving.
The retainer overview shows hours logged, remaining budget, period revenue, remaining time, invoices, time entries, projects, and report access. It also warns visually when tracked hours approach or exceed the budget.
Do not wait until the end of the period. Review the budget while work is still underway, when scope or staffing can be adjusted.
Unused Time and Excess Hours
Unused hours do not automatically carry forward into the next retainer period. FreshBooks suggests creating a prepayment credit when unused value should be applied toward a later retainer invoice.
That is a business decision, not an automatic rollover.
The client agreement should state what happens to unused time. Depending on the contract and applicable law, unused time may expire, carry forward through a credit, or require another treatment.
Excess hours work differently. FreshBooks records time beyond the retainer terms as excess hours, but the business must manually generate an invoice for them after the period ends. An excess-hour rate must already be specified in the retainer terms.
The documented action appears as a Generate an invoice link in the excess-time banner for the selected period. The resulting invoice can be edited before saving or sending.
Review the hours first. Skip billing excess time solely because the banner appears.
Use the Retainer Summary Report
The Retainer Summary report provides a detailed breakdown of time tracked by the owner and team for a client with a retainer. It is available through:
Reports > Retainer Summary under Time Tracking Reports.
Its filters include client, retainer period, and grouping by team member, client, project, or service. The report can be exported as CSV, printed or saved as PDF, or sent to selected email addresses.
This report is useful before an excess-hour conversation because it shows where the time went. It can also reveal a project or team member whose entries were applied unintentionally.
A report is evidence, not a correction.
Fix incorrect entries in the underlying records rather than editing an exported spreadsheet and treating that copy as the new accounting source.
Priority two is the source entry. Skip arguing over the total until the project, service, person, and period have been reviewed.
How Client Credits Work
FreshBooks supports credit notes, prepayment credits, and overpayment credits. These values contribute to the client’s overall credit balance and can be applied to invoices as payment.
To use available credit manually:
Open invoice > More Actions > Add a Payment
When credit exists, FreshBooks selects it automatically. If the credit does not cover the whole invoice, separate partial payments can be added after the available credit has been used.
FreshBooks can also apply credits automatically to invoices generated from recurring templates and retainers. The setting appears under:
Settings > Advanced Preferences > Recurring Templates > Automatically Apply Credits.
This affects templates and retainers that are sent automatically. Available credit is applied before the invoice is sent and before recurring payment processing occurs.
Check that preference before asking why AutoPay collected less than the original invoice amount.
Review the Credit Balance Report
The Credit Balance report summarizes credit issued, credit applied, and credit remaining for each client. It is found under:
Reports > Credit Balance in Payments Reports.
The report includes:
- balance forward;
- credit issued;
- credit applied;
- remaining credit balance.
Date and currency filters matter. Only one currency can be viewed at a time, so a client with transactions in several currencies may require separate reports.
The report does not identify one specific credit source for each invoice payment. FreshBooks applies payments from the client’s overall credit balance rather than tying them to one particular credit note, prepayment credit, or overpayment record.
That can surprise someone expecting a one-to-one audit trail.
Use the Client Account Statement when the goal is to identify invoices that received credit payments. Use the Credit Balance report when the goal is to understand the total issued, applied, and remaining.
Refund an Online Payment
FreshBooks allows the owner or account admin to process refunds for many online payments. Other team roles may not have refund authority.
Current refund windows documented by FreshBooks include:
- card payments up to 60 days old;
- ACH bank transfers up to 90 days old;
- certain Affirm and Afterpay transactions up to 60 or 90 days, depending on the transaction.
Older eligible transactions may require FreshBooks Support, Stripe, or another provider route. PayPal refunds must be completed manually through PayPal and then reflected correctly in FreshBooks.
For supported online payments, the Refund action can appear in the Payments section or on the individual invoice. FreshBooks asks for a reason such as Duplicate, Fraudulent, or Requested by Customer. A notification is emailed to the client after processing.
Confirm the amount and transaction before pressing it.
A refund should not be used merely to reduce a client’s future invoice. A credit may be the more accurate tool when money is meant to remain available within the client relationship.
Refunds Do Not Reverse Every Cost
FreshBooks Payments transaction fees are deducted before payout and recorded automatically as expenses. FreshBooks states that those transaction fees are not returned to the business when a refund is issued.
This creates a difference between the amount returned to the client and the business’s final economic cost.
For U.S. accounts, FreshBooks publishes payment-method fees and several associated charges, but the applicable rate can depend on card type, payment method, currency, account setup, and plan.
Do not quote a fee from memory. Check the current account documentation and payment record.
FreshBooks also warns that passing payment-processing costs to clients can be restricted by state or national law. Any surcharge policy should be reviewed against the business’s jurisdiction and card-network requirements.
Failed Recurring Retainer Payments
Retainer invoices can use recurring payments when the client opts into AutoPay. If the first recurring payment attempt fails, FreshBooks emails the primary client and moves the payment into Retry status. It retries within the next 24 hours, then makes a second retry; after that failure, the invoice changes to Declined and automatic retries stop.
A declined invoice can be retried manually through the Retry Payment link in the invoice history bar.
Do not record a manual payment before confirming whether an automatic retry succeeded. Both records could appear, producing an apparent duplicate payment.
Removing saved payment information stops AutoPay immediately, but the retainer can continue generating invoices. The client must opt in again or pay each invoice manually.
FreshBooks FAQ
Can one client have two active retainers?
No. FreshBooks permits one active retainer per client.
Does unused retainer time roll over?
Not automatically. FreshBooks says unused time does not carry into the next period, though a prepayment credit can be created when the business chooses to apply value later.
Are excess hours invoiced automatically?
No. They are recorded automatically but invoiced manually after the retainer period ends.
Can client credit pay a retainer invoice?
Yes. Credit can be applied manually, or automatically to eligible retainer invoices sent automatically when Automatically Apply Credits is enabled.
Why did AutoPay charge less than expected?
FreshBooks may have applied the client’s available credit before processing the recurring payment. Review the invoice payment history and Credit Balance report before altering the charge.
Who can process a refund?
The business owner or an account admin.
Are FreshBooks payment fees returned after a refund?
No. FreshBooks states that transaction fees are not refunded to the business owner.
Why did a failed retainer payment stop retrying?
FreshBooks retries a failed recurring payment twice. After the second retry fails, the invoice becomes Declined and requires manual action.