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The short answer
A monthly retainer is a fixed fee a client pays in advance each month for an agreed amount of work, defined as hours or as deliverables. The agreement should say exactly what the fee covers, whether unused hours roll over or expire, the rate for extra work, when the invoice is issued and paid, and how withholding tax and VAT are handled.
Agencies, consultants, accountants, IT support firms and law firms in Nigeria increasingly sell their work on retainer. The client gets priority access and a predictable bill; the provider gets steady cash flow. Disputes come from three places: what is included, what happens to unused time, and late payment. A retainer agreement settles all three in advance.
Hours or deliverables?
| Model | Works well for | Define |
|---|---|---|
| Hours bank | Legal advice, IT support, consulting | Hours a month, how time is recorded and reported |
| Deliverables | Social media, content, bookkeeping | A list: e.g. 12 posts, 2 reports, monthly accounts |
| Availability | On-call advisers, company secretarial | Response times and channels, plus a cap |
Rollover, overage and timing
- Rollover. Either unused hours expire at month end, or a limited number roll over for one month only. Unlimited rollover builds a liability you may never be able to deliver.
- Overage. Work beyond the retainer is billed at an agreed hourly rate or quoted first. Say which.
- Invoice timing. Invoice the retainer in advance, for example on the 1st of the month, payable within 7 days. Bill overage in arrears with the next invoice.
- Suspension. If payment is late beyond a stated number of days, work pauses until it is paid.
Withholding tax and VAT
Under the 2024 withholding tax regulations, as summarised by PwC, consultancy, professional, management and technical fees attract WHT of 5% for residents (10% for non-residents), deducted by the client and evidenced by a WHT receipt that the provider can use as a credit. Professional service providers are excluded from the small business VAT exemption under the Nigeria Tax Act 2025 (Forvis Mazars, March 2026), so many retainer providers will charge VAT at 7.5%. Check whether rates have changed before you rely on them, and see withholding tax on invoices.
Worked example (illustrative figures)
| Line | Amount |
|---|---|
| Monthly retainer, 20 hours | ₦400,000 |
| Overage: 6 hours at ₦25,000 | ₦150,000 |
| Fees invoiced | ₦550,000 |
| VAT at 7.5% | ₦41,250 |
| Invoice total | ₦591,250 |
| Less WHT at 5% on fees (₦550,000) | (₦27,500) |
| Cash the provider receives | ₦563,750 |
The provider records ₦27,500 as a tax credit once it has the client’s WHT receipt. Without the receipt, chasing the gap becomes a dispute; our guide to customers who pay less than the invoice covers it.
Template: monthly retainer agreement
- MONTHLY RETAINER AGREEMENT dated [date]
- Between [Provider name, RC/BN, TIN, address] (the Provider) and [Client name, RC, TIN, address] (the Client).
- 1. Services. The Provider will provide [describe services] (the Services), as set out in Schedule 1.
- 2. Included each month: [20 hours of work] OR [the deliverables listed in Schedule 1]. Time is recorded in [15-minute] units and reported with each invoice.
- 3. Fee. ₦[amount] per month plus VAT where applicable, invoiced on the [1st] of each month in advance, payable within [7] days.
- 4. Rollover. Unused hours [expire at month end / up to [5] hours roll over to the next month only].
- 5. Extra work. Work beyond the monthly allowance is charged at ₦[rate] per hour [or quoted and approved in writing first] and invoiced with the next monthly invoice.
- 6. Tax. Where the Client deducts withholding tax, it will send the Provider the WHT receipt within [30] days of payment.
- 7. Late payment. If an invoice is unpaid [14] days after its due date, the Provider may pause the Services until payment, after written notice.
- 8. Term. Minimum term [3] months, then continues monthly. Either party may end it with [30] days’ written notice.
- 9. Out of scope. [Court appearances / ad spend / travel / third-party costs] are not included and are billed separately with prior approval.
- 10. Confidentiality and ownership. [Confidentiality obligations; who owns work product once paid for.]
- 11. Law and disputes. Nigerian law; [mediation then courts of State].
- Signed: Provider ____ Client ____ Date ____
Steps before you start a retainer
- Agree the scope in writing, with examples of what counts as in scope and what does not.
- Choose hours or deliverables, and agree how you will report usage each month.
- Confirm whether the client will deduct WHT and who sends the receipt.
- Issue the first invoice before work starts and set a reminder for each monthly invoice.
- Review the retainer after the minimum term: if the client always uses far more or far less than the allowance, reprice it.
For freelancers who prefer a deposit per project instead, see deposits and retainers for freelancers.
Where Pryme fits
With a Pryme Business Account you can issue monthly invoices and give each retainer client a dedicated virtual account so each client’s payments are easy to match. For foreign clients, the multicurrency account holds USD, GBP and EUR with local account details for each.
Questions people ask
What is a retainer fee in Nigeria?
A fixed amount paid in advance, usually monthly, for an agreed level of work or availability from a lawyer, consultant or agency.
Do unused retainer hours roll over?
Only if the agreement says so. Many providers let a limited number roll over for one month; otherwise they expire.
Is withholding tax deducted from retainer fees?
For professional and consultancy fees, the 2024 regulations set 5% for resident providers, deducted by a client that is required to deduct. Check current rules.
Should a retainer invoice include VAT?
If the provider is VAT-registered, yes, at 7.5%. Professional service providers are excluded from the small business exemption under the Nigeria Tax Act 2025.
Sources
- PwC Nigeria: Highlights of the Deduction at Source (Withholding) Regulations 2024 · accessed Oct 2026
- Forvis Mazars: 2025 NTA VAT key business changes (Mar 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.