How to set up and record a retention

Step 1 - Record the invoice value minus the retention value using invoice date

1. Click Invoices and credits then click New invoice.
2. Enter the invoice details using the invoice date, and ensuring to enter the net value of the invoice minus the retention value.
   
   EXAMPLE: If the total cost is £10,000 plus VAT, but the retention is 10%, you would enter £9,000 plus VAT for this invoice (£10,000 +VAT minus £1,000 + VAT).
   
   If required, to change the nominal code or tax code details, click the item line and press F3 to open Edit Item Line.
   
   
3. Click Save then click Close.

Step 2 - Record retention value as an invoice using retention due date

CAUTION: Please be aware that if you are on Standard VAT, once this invoice is posted the VAT will be posted on your next VAT Return, so you might want to consider waiting to do this until closer to the retention due date.

TIP: If you don't have a retention expiry date, you can enter a temporary date which you can amend this later. However if you're on Standard VAT you might want to consider waiting to do this until you have confirmation of the retention due date.

1. Click Customers then click Batch invoice.
2. Enter the retention details as follows:

   A/C	Date	N/C	Details	Net	T/C*	VAT
   Choose the customer account.	Enter the expiry date of Retention.	Enter the required sales nominal code.	Retention Amount Details.	Enter the net value of the retention.	Enter the required tax code.	Enter the VAT value.

   EXAMPLE: Based on the example earlier, the net value of the retention would be £1000.
   
   
3. Click Save then click Close.

Step 3 - Post the customer receipt for the total minus retention value invoice

When you have paid off the original invoice minus the retention value in real life, for example the £9,000, you need to show it in your accounts by posting a customer receipt.

1. Click Bank accounts and select the required bank account.
2. Click Customer receipt and select the required customer account.
3. Enter the required Date and Reference.
4. In the Receipt column against the invoice, enter the amount paid.
   
   EXAMPLE: £9,000 + VAT
   
   
5. Click Save.

Step 4 - Once the retention is paid record the receipt

1. Click Bank accounts and select the required bank account.
2. Click Customer receipt and select the required customer account.
3. Enter the required Date and Reference.
4. In the Receipt column against the retention invoice, enter the amount paid.
   
   EXAMPLE: £1,000 + VAT
   
   
5. Click Save.

CIS retentions only

Split the invoice value between the retention value and the remaining invoice value.

Where you're the subcontractor

1. Click Customers then click Batch invoice.
2. Enter the retention details as follows:

   A/C*	Date*	N/C*	Details	Net	T/C*	VAT
   Choose the customer account.	Enter the expiry date of Retention.	Enter the required sales nominal code.	Retention Amount Details.	Enter the net value of the retention.	Enter the required tax code.	Enter the VAT value.
   Choose the customer account.	Enter the invoice date	Enter the required sales nominal code.	Invoice reminder details	Enter the net value of the invoice less the retention	Enter the required tax code.	Enter the VAT value related to the remaining invoice value..

3. Click Save then click Close.

Once the payment is received, post the customer receipt for the total minus the retention value. 

1. Click Bank accounts and select the required bank account. 
2. Click Customer receipt and select the required customer account.
3. Enter the required Date and Reference.
4. In the Receipt column against the invoice, enter the amount paid.
5. Click Save.

Where you're the main contractor

1. Click Suppliers or Subcontractors then click Batch invoice.
2. Enter the retention details as follows:

   A/C	Date	N/C	Details	Net	T/C*	VAT
   Choose the supplier.	Enter the expiry date of Retention.	Enter the required purchase nominal code.	Retention Amount Details.	Enter the net value of the retention.	Enter the required tax code.	Enter the VAT value.
   Choose the supplier account.	Enter the invoice date	Enter the required purchase nominal code.	Invoice reminder details	Enter the net value of the invoice less the retention	Enter the required tax code.	Enter the VAT value related to the remaining invoice value.

   If you're using the Sage 50 CIS module, to ensure CIS tax is deducted correctly, you must use the correct CIS nominal codes.
   
   
3. Click Save then click Close.

Once the payment is sent, post the supplier payment for the total minus the retention value. 

1. Click Bank accounts and select the required bank account. 
2. Click Supplier payment and select the required supplier account.
3. Enter the required Date and Reference.
4. In the Payment column against the invoice, enter the amount paid.
5. Click Save.

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