How I Handle Retainer Payments

Last week I wrote about keeping money in the bank for this series on wedding business money management. This week I'll explain how I handle the retainer payments that my clients give me.

First, in my contract I don't deal with deposits, it's all retainers. A very simplified reason is that a retainer is a payment to retain the services of someone else. A deposit is a payment toward a specific product.

When clients hire me they sign a contract that says that the retainer fee is non-refundable. If anything unforeseen did happen and the wedding was cancelled, the retainer isn't something that I refund unless I have a good reason to do so. It's up to me, though, since the contract specifies that it's a non-refundable retainer fee, not a deposit that's been put down on a cake.

It I did consider it a deposit someone could make the argument that since they didn't get the cake, they should get the deposit refunded. Since I consider the retainer to be something that covers my time for doing tastings, paperwork, etc., that would mean that any work I had done up to that point wouldn't be paid for.

So anyway, I call it a retainer, not a deposit.

When I collect a retainer that books the date, and I put the payment in the bank. That's where it sits until the cake is delivered in one piece. When the client pays the balance that also goes in the bank until delivery.

That means that every cent that a client has paid me is in the bank until I've actually made the cake. Since I don't take the money out until then it's also there in case I drop dead and my husband has to refund all of the payments that clients have given me.

That way the business stays separate from our personal finances, and in the case of emergency (which would be the drop dead thing) I could return the retainers without dipping into our household money.

It's a big mistake to spend your retainer payments as soon as you get them. You'll never be able to build up a base amount of working capital to use for future expenses.

When I do make the cake, I don't immediately withdraw all of the cash that was paid for the cake. I'll cover that next week when I explain how I budget for future expenses.

Kara Buntin owns A Cake To Remember LLC, custom wedding cakes in Richmond VA

 Kara Buntin owns A Cake To Remember LLC in Richmond VA, and cake supplies online at and