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The Client Who Paid 23% of What We Were Owed

By Angela Torres, Marketing Agency Owner — Denver, CO

I founded Torres Marketing in 2016 with three clients and a freelance background in content strategy. Five years later I had 11 employees, a solid client roster, and a billing situation that was quietly destroying the business.

In 2021 I did a detailed accounts receivable audit. The numbers were bad. We had $84,000 in outstanding invoices — some of them more than 90 days old. Three clients had open balances exceeding $12,000 each. One of those clients was, by invoice count, one of our most active — they just hadn’t paid most of what they owed.

When I engaged an attorney and began a collections process on the largest balance — $23,400 — the client disputed 22 invoices, claiming the work hadn’t been delivered as described or hadn’t been authorized. We settled for $5,422. Twenty-three percent of what they owed.

The root cause was not the client’s bad faith — though there was some of that. The root cause was our billing structure. We had been invoicing monthly in arrears for a combination of services with different authorization levels, different approval workflows, and different individuals in the client organization. Nobody on our side had documented what was authorized. Nobody on their side could confirm what had been approved.

We rebuilt the billing model from the ground up.

The Retainer Model

The first structural change was converting all ongoing client relationships to retainers. Monthly retainer billing with a clearly defined scope of services eliminates the month-end scramble to invoice for 23 different line items across 6 different campaigns.

Monthly Retainer Tiers:

The retainer fee is billed on the first of the month. Work begins when the invoice is paid.

The Monthly Retainer Invoice

Invoice Flow app invoice editor of a marketing agency — the monthly retainer, Google and Meta ad spend as pass-through lines, a 15% management fee and a performance bonus
Retainer, ad spend passed through, the 15% fee spelled out — transparency clients trust.

InvoiceFlow generates and sends on the first of each month:

Monthly Marketing Retainer — [Client Name] — [Month Year]:

The paid advertising budget is separated from the retainer fee. This is important. Ad spend varies month to month. Conflating it with retainer fees creates disputes about whether the client is being charged for management fees or media spend.

Project Work Outside Retainer Scope

Campaigns, launches, and one-time deliverables outside the retainer scope are quoted separately:

Project Proposal — [Client Name] — [Date]:

Three-phase billing for projects protects both parties. The client doesn’t pay the full amount before seeing anything. We don’t deliver everything before being paid anything.

Invoice Flow app recurring invoices of a marketing agency — SEO, growth and social retainers across USD and GBP clients
Every retainer bills itself on the 1st — you approve and send, not build from scratch.

Paid advertising involves two separate billing streams: the management fee and the actual ad spend. They should never be on the same invoice:

Paid Advertising Management — [Client Name] — [Month Year]:

Advertising Spend Reconciliation — [Client Name] — [Month Year]:

The two-invoice system prevents any confusion about what’s a management fee and what’s actual media spend. The client can see exactly what the platforms charged and exactly what we’re adding for management.

The Business After the Billing Rebuild

Two years after rebuilding the billing model:

We have not had a billing dispute in fourteen months. Not because clients became more cooperative — the same kinds of clients we served before. Because the invoices now document what was agreed, what was delivered, and what authorization supports the billing.

What InvoiceFlow Does for Marketing Agencies

Marketing agency billing involves monthly retainers with clear scope documentation, separate paid advertising management fees and spend reconciliation invoices, project campaign billing with milestone payments, and corporate PO fields for enterprise clients. InvoiceFlow handles all of these from one Android app — recurring invoices auto-generated on the first, project milestone billing, and the custom fields corporate procurement departments require.

Download InvoiceFlow. Convert your ongoing client relationships to monthly retainers. Separate your ad spend invoices from your management fee invoices. The billing clarity protects both relationships and revenue.

Angela Torres is the owner of Torres Marketing in Denver, Colorado, providing digital marketing strategy, content marketing, social media management, SEO, and paid advertising services for mid-size businesses.