How to Record an Evergreen Retainer Replenishment
Accounting for a client payment made to 'top up' a trust account balance after it falls below a contractually required minimum.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Restricted Cash - Client Trust Account | Asset (+) | 3,000.00 | - |
| Client Trust Liability | Liability (+) | - | 3,000.00 |
💡 Accountant's Note
An 'Evergreen Retainer' requires the client to maintain a minimum balance (e.g., $5,000) in trust. When the firm draws down fees, the client must replenish the fund. Like the initial retainer, this is recorded as a liability because the funds are unearned at the time of receipt. This ensures the firm always has a 'buffer' to cover future billable hours and costs.
Practitioner & Systems Framework
💻 ERP Architecture
Modern legal billing systems (Clio, CosmoLex) have 'Evergreen' alerts. The accountant must ensure the replenishment is coded to the Trust bank account G/L, not the Operating account, to avoid commingling.
⚠️ Audit Flags
Timing of the draw-down. If a firm bills $4,000 but only draws $3,000 because they 'forgot' to ask for replenishment, the firm's cash flow is negatively impacted.
📄 Required Documentation
Engagement Letter (specifying evergreen terms), replenishment request/notice sent to client, and bank deposit receipt.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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