Crediting a Recurring Work Fee Against a Success Fee That Never Arrives

The monthly work fee, covering diligence support, valuation work, and deal preparation while an engagement is active, should be booked as earned revenue at the time it's billed, not held in some provisional status waiting to see whether a success fee eventually triggers. Set it up as a standard recurring subscription in either Stripe Billing or Chargebee, billed and recognized exactly like any other retainer. The credit mechanism against a future success fee is a pricing term in the engagement letter, not a reason to treat the monthly fee as anything less than real revenue when it's collected.

When a deal does close and the success fee triggers, bill it as a one-time invoice for the full contracted amount, then apply a credit equal to the work fees already collected over the engagement as a separate line on that same invoice or as a distinct credit note. Both platforms support issuing a credit note against a one-time invoice cleanly. The key is keeping the credit calculation and its documentation clearly tied to the specific engagement's history of work fees, not an estimate, so the final net amount owed is easy for the client to verify against their own records of what they've already paid.

Structure the two fee types in this order:

1. Set the monthly work fee up as a standard recurring subscription and book each invoice as earned revenue when it is billed.
2. When the deal closes, bill the full contracted success fee as a one-time invoice.
3. Apply a credit equal to the work fees already collected, either as a separate line on that invoice or as a distinct credit note.
4. End the work fee subscription after the final invoice, but keep its billing history intact for the credit calculation.
5. Agree in the engagement letter how creditable fees work, including any cap and whether they can transfer to another deal.

This is the scenario that causes the most confusion: a deal falls apart in diligence, the success fee never triggers, and the client sometimes assumes the monthly work fees paid along the way should be refunded since they were framed as creditable against a fee that's now moot. Neither platform makes this determination for you; it depends entirely on what the engagement letter actually says. If the work fees are structured as fully earned regardless of outcome, with the credit only applying if and when a success fee is actually owed, make that explicit in the contract language before the engagement starts, not after a client asks for a refund on a dead deal.

Say a firm bills a client $15,000 a month for six months of active deal work, collected as a standard recurring subscription, and the deal then closes with a contracted success fee of $400,000. In this example, the final invoice bills the full $400,000 as a one-time charge, with a credit note for $90,000, the six months of work fees already paid, applied against it, so the net amount owed comes to $310,000. Both the gross success fee and the credit should appear clearly on the invoice, so the client can see exactly how the number was calculated rather than just seeing a net figure with no visible math behind it.

Chargebee's credit note functionality, designed for exactly this kind of partial credit against a larger invoice, tends to be more straightforward to configure than building the same logic in Stripe Billing, where crediting a prior series of subscription payments against a new one-time invoice usually means custom calculation outside the platform's native tools. For a firm running several deals with this credit structure simultaneously, that difference in setup effort adds up, though a firm running only a handful of engagements at a time may find Stripe Billing's lower cost outweighs the extra manual work.

Separately from how the firm bills its own clients, these benchmarks matter directly to the diligence work M&A advisors actually perform on software targets: median annual recurring revenue growth for private B2B SaaS companies has cooled to 25%¹, and median net revenue retention sits at 101%², both common reference points when a firm is evaluating whether a target's growth and retention profile supports the valuation a deal is being priced at. Keeping this analysis clearly separate from the firm's own billing structure, one is deal work product, the other is how the firm gets paid, avoids any confusion between the two in client-facing materials.