Accounts Receivable Retention

Many job contracts include retention. When you create a receivable invoice, Sage 100 Contractor withholds retention at the rate specified in the job file. If you do not set up a default rate in the job file, you can withhold a flat amount on each individual invoice.

Posting an invoice declares the gross amount of the invoice as income. However, a percentage of the gross amount is withheld as retention, so the client is actually billed for the net amount (gross invoice amount – retention = net invoice amount). Therefore, retention is already declared as income but is not yet due. Consequently, Sage 100 Contractor does not include retention in the invoice aging, and does not apply finance charges to it.

When you are ready to bill the client for retention, it is not necessary to create a new invoice. The retention has already been declared income, so you only need to release the retention that has been withheld. You can release retention on each invoice individually, or you can release the retention for the entire job at one time. Having released the retention, you can then send the client a statement reflecting the amount that is due your company.

Changing retention rates for jobs

In the 3-5 Jobs (Accounts Receivable) window, you can change the retention rate for a job contract simply by entering the new rate in the Retention Rate text box. Sage 100 Contractor will calculate retention for all new invoices using the new rate, while existing invoices maintain the previously calculated retention.

You can also apply the new retention rate to all existing job invoices. When you increase the retention rate, Sage 100 Contractor calculates the new amount of retention based on the gross invoice amount. If the invoice balance is smaller than the calculated retention, Sage 100 Contractor adjusts the retention accordingly. For example, the retention is increased from 5% to 10% for a job and the change is applied to all job invoices. A $1,000 invoice is 95% paid and the remaining $50 balance is for retention. Because the invoice is already 95% paid, Sage 100 Contractor cannot recalculate retention at the 10% rate on this invoice. Consequently, Sage 100 Contractor does not change the retention for the invoice.

Applying a decreased retention rate can also affect previous invoices. While retention is decreased, the net balance due on invoices can increase. Suppose you decrease the retention from 10% to 5% for a job and apply the decrease to all job invoices. The net amount due for a $1,000 invoice was originally $900, but is changed to $950. If client had paid $900, the client now owes an additional $50, and the last $50 is withheld as retention.

To change the retention rate for a job

1

Open 3-5 Jobs (Accounts Receivable), and then select the job.

2

In the RetentionRate text box, enter the new rate.

3

If the new retention rate only applies to new invoices, go to step 5.

4

On the Update menu, click Recalculate Retention.

5

In the New Due Date for Invoices text box, enter the due date you want to assign the invoices.

6

Under Select Recalculation Option, do one of the following:

• Select to update Only invoices with Retention, or
• Select to update All invoices.

7

Click OK.

8

On the File menu, click Save.

Entering retention as a flat rate for accounts receivable invoices

You can add a retention rate to the entire job which applies a single retention rate to all the job invoices. You can also enter retention to individual invoices as a flat rate.

To enter retention as a flat rate for accounts receivable retention:

1

Open 3-2 Receivable Invoices/Credits.

2

Locate the invoice to which you want to add retention.

3

Under the grid, locate the Retention box, type an amount, and the press Enter key.

4

Select File > Save.

Releasing retention for jobs

To release retention for a job:

• Select to update Only invoices with Retention, or
• Select to update All invoices.

Tip: You can verify that retention has been released by clicking the Invoices button (bottom of the window) and reviewing the Net Due amount.

Releasing retention for jobs and printing statements

When you bill a customer for retention for a job that is 100 percent complete, it is not necessary to create a new invoice. The retention is included on the invoices created from 3-7 Progress Billing applications. This three-part procedure shows you how to release retention, print a progress billing report, and then print a job statement to request final payment.

Important! All past due accounts receivable invoices must have been collected before completing this procedure.

If you need to print a retention invoice instead of a statement, see the topic Creating final retention invoices.

Part 1—To close the current bill, release retention, and print a progress billing report

1. Open 3-7 Progress Billing.
2. Open the last application with a Status 3-Posted for the job.
3. Click Next.
4. To the message, Reminder: A new record will be created and this one will become Closed. Do you want to continue? click Yes.
5. Be sure to note the amount in the Retention Rate box.
6. From the Update menu, select Release Retention.
7. To the message, This will reset all retention rates to zero and recalculate the application. Do you want to continue? click Yes.
8. On the Calculate grid, choose a method to calculate the Progress Billing and click OK.

Note: The Retention Total amount becomes the Current Due amount.

9. From the File menu, select Save.
10. From the File menu, select Recall.
11. From the Options menu, select Submit Application.
12. From the File menu, select Print.
13. Print the appropriate Progress Billing report, reports 21—42, and send this report to your customer to show the retention amount is now due.
14. Close the 3-7 Report Printing window.

Note: The final application remains in Submitted status because there is not an invoice amount to post.

Part 2—To recalculate the retention and due dates

Important! If you complete this part and have not received payments for amounts outside of retention, the current balance due will reflect retention and any outstanding amounts. This could be perceived that current receivables are overstated.

1. Open 3-5 Jobs (Accounts Receivable), and select the job.
2. In the Terms section of the window, clear the Retention Rate.
3. From the Update menu, select Recalculate Retention.
4. On the Recalculate Retention window, enter the New Due Date for Invoices and select the appropriate Recalculation option.
5. Click OK, and to the message to confirm the number of open invoices found, click OK again.
6. From the File menu, click Save.
7. Then, on the 3-5 Jobs (Accounts Receivable) window, click the Invoices button and review the Net Due amount to verify the retention has been released.

Part 3—To print a 3-4 Statement for detailed billing information

1. Open 3-4 Statements.
2. Select the 21-Job Statements report.
3. In the Job# box, type the job number.
4. Select the Include Paid Invoices check box.
5. Select the Include Payment History check box.
6. From the File menu, click Print.
7. On the Statement Variables window, type the Statement Date, and click OK.
8. The statement prints showing all outstanding amounts due, including the released retention.
9. Close the 3-4 Report Printing window.