Retainage
Retainage is a percentage of billing amounts contractually withheld on an invoice, which will be billed to the client at a future, pre-determined point in the project, usually upon the project’s completion or upon reaching a major milestone, as specified in the contract.
Retainage is usually based on the entire invoice, but it may also be based on specific invoice sections. For example, you could bill the reimbursable and consultant expenses in full when the invoice is issued, but apply a 10% retainage to the remaining invoice sections until you complete the project satisfactorily.
Retainage Settings
You turn on the retainage feature in
. Then you turn on retainage for a project in a project's billing terms in . Complete the retainage settings in the Retainage section of the More Calculations tab in Billing Terms. You specify the retainage percentage to be withheld from total billings or from any combination of the six potential components of an invoice: labor, consultants, expenses, fees, units, or add-ons. You also must set up general ledger accounts for retainage in and map retainage accounts to invoice and accounts receivable accounts in .Withholding Retainage on Invoices
After you establish retainage terms for a project, each time that you generate an invoice for the project in Interactive Billing or Batch Billing, the retainage to withhold is calculated and reported on the invoice. The amount is shown in a separate section of the invoice titled Retainage.
In addition to calculating the retainage on an invoice, retainage is posted and tracked throughout Billing, Accounts Receivable, project control, and the general ledger. The retainage amount withheld from invoices is posted to a retainage account. When you bill the withheld retainage, the retainage is moved out of the retainage account and into an accounts receivable account.
Billing the Withheld Retainage
You bill previously withheld retainage in Allow Final Processing check box selected in the Billing Security section of the Accounting tab in .
by clicking on the actions bar. You select to bill retainage for one or more previously-posted invoices that have retainage withheld for a project. You post a retainage-only invoice in . To bill previously withheld retainage, your security role must have the- Related Topics:
- Checklist: Setting Up Retainage
Review the steps for setting up retainage. - Taxes on Retainage
You have two timing options for billing clients for taxes on retainage amounts. - Effects of Enabling Retainage
After you enable the retainage feature, retainage-related fields and data appear in multiple areas of Vantagepoint. - Setting up Retainage Accounts
Before you process invoices with retainage, you must set up one or more general ledger accounts to temporarily store the withheld retainage amounts that are not yet invoiced. - How Retainage is Calculated on Invoices
The retainage amount withheld is usually based on the entire invoice, but it may also be based on specific invoice sections. For example, you could bill the reimbursable and consultant expenses in full when the invoice is issued, but apply a 10% retainage to the remaining invoice sections until you complete the project satisfactorily. - Displaying Retainage on Reports
You can display retainage amounts on all of the accounts receivable reports, including the AR Aged, AR Ledger, and AR Statement. Retainage amounts also display on the Office Earnings report and in the Financial Analysis section of the Project Progress report. You may also want to review the Invoice Register. - Examples of How Retainage is Calculated Over the Life of a Project
The way in which retainage is calculated depends on whether you are generating the first invoice for a project, a subsequent invoice, or an invoice generated after the retainage limit is reached. - Examples of Mapped Retainage Accounts
After you create one or more retainage accounts, you must link the retainage accounts to invoice and accounts receivable accounts. - How to...
After you enable and set up the retainage feature, retainage amounts are withheld from invoices for projects that use retainage, and then you eventually bill the withheld retainage in a separate invoice.