Retainer rollover rules, explained

Rule 1: No rollover

Unused hours are gone at month end. Anything over 20 hours is overage.

Simple, but the client "loses" 6h in August, which often causes friction at renewal. Overage over the three months: $2,900.

Rule 2: Rollover capped at 10 hours, expiring after one month

Up to 10 unused hours carry into the next month. Carried hours last one month, and the oldest hours are used first.

The 6h rolled from August absorb September's extra hours, and October's overage is smaller (8.5h = $1,700) because 3h carried in.

Unlimited rollover gives the same result in this example, because the unused hours never exceeded the cap. The difference shows up when unused hours pile up: with a cap, anything above it is lost at month end; with unlimited, it keeps carrying until it expires (if you set an expiry) or is used.

Rule 3: Overage carried instead of billed

Same rollover rule, but over-use isn't invoiced. It's subtracted from next month instead.

October: 8.5h carried into November as a deficit, with no overage invoice. Common when the client prefers predictable invoices. Just make sure November's balance reflects it.

Why "oldest hours first" matters

When rolled-over hours expire, the order you use them in changes how much is lost. Using the oldest hours first means the hours closest to expiring are spent before they disappear. That's what most clients expect and what's fairest to them.

Changing terms mid-contract

Retainers get renegotiated: "From March, 30 hours at $220/h." Your history should stay exactly as it was billed, and only months from the change date onward should use the new terms. In a spreadsheet, that usually means copying the whole sheet and hoping the formulas still line up.

The spreadsheet problem

Each rule above is easy alone. Together (a cap, plus expiry, plus oldest-first, plus a term change in month 5, plus months that start on the 15th) they make a formula chain that breaks quietly. When it breaks, you either under-bill overage or over-charge a client.