Withhold retainage on customer AR sales invoices

Access can vary depending on your organization's subscriptions and your permissions. You need the following:

Requirements to configure retainage
Prerequisites Before you can enable retainage features, you must first configure:
  • Accounts Payable (AP)
  • Accounts Receivable (AR)
  • Cash Management
  • General Ledger (GL)
  • Order Entry (OE)
  • Projects
  • Purchasing
Restrictions
  • You cannot enable a Contracts and Construction subscription together on the same company.
  • Configure Construction-enabled companies with the accrual only accounting method.
  • The Construction subscription enables the project, task, and cost type dimensions. While use is optional, you can't disable these dimensions.
Subscription
  • Construction
  • Projects, Module: Project Costing and Billing
User Type
  • Business
  • Project Manager
  • Construction Manager
Permissions

Retainage permissions:

  • Accounts Receivable release retainage: release retainage on customer AR sales invoices
  • Accounts Payable release retainage: release retainage on supplier AP supplier invoices

Ask your system administrator for assistance.

Understand retainage

Retainage (also known as retention) is a portion of the agreed upon contract price intentionally withheld until the work is substantially complete to assure that the customer or vendor (for projects and grants) or contractor or subcontractor (for Construction) satisfies their obligations and completes a project.

Construction project agreements (commonly referred to as Construction contracts) stipulate the retainage amounts and conditions under which retainage is withheld and released (invoiced). Some states regulate retainage agreements.

Learn more about retainage.

Configure retainage for customers

  1. Set up retainage receivable GL accounts for customers.
  2. In Order Entry, set up transaction definitions (TD) for:
    • TD order type: construction contracts
    • TD invoice type: customer AR sales invoices
  3. Set up customers in Accounts Receivable and define the customer's default retainage percentage.
  4. Configure retainage.

Withhold retainage on customer AR sales invoices

You can convert a sales order (construction contract) to an invoice in Order Entry or Projects.

Generate invoice in Projects

  1. Go to Projects > All > Generate Sales Invoices.

  2. On the Invoicing options tab, select an invoice template (transaction definition) with retainage enabled.
  3. If invoicing a customer with multiple projects, choose to invoice by customer and sort by project, which generates one invoice for the customer with all transactions grouped by project.
  4. Select Preview to see the invoice before you generate it.
  5. Scroll to the Order entry transactions list and confirm the amounts and retainage percentage.
  6. Select the lines you want to include on the invoice.
  7. Select Create Invoice.
  8. To review the new invoice, go to Projects > All > Invoices > View.
  9. Edit or view the invoice.
  10. Go to the Posting Details tab to view the posted retainage information.

Convert existing sales order (Construction contract) to invoice

  1. Go to Projects > All > Invoices > View.
  2. Locate the relevant Construction contract (sales order) and select Convert.
  3. For each entry in the Entries section, confirm the amounts and retainage percentage.
  4. After you enter transaction information, do one of the following:
    • Select Post to save the transaction. The transaction has a closed state and is ready for the next step in your workflow.
    • Select Draft to save the transaction in a draft state.