How to set up and record a retention

Summary

How to set up and record retentions in Sage Accounting.

Description

A retention is when a customer/supplier retains an amount of money for a specified period.

Resolution

Representative example

Your construction company has completed some work for your customer, ABC Garages Ltd. The total cost of this work is £10,000 (excluding VAT for now). You've agreed with your customer that they will pay you 90% of the full invoice value now, or £9,000. You then withhold 10% of the full invoice value for a period of six months.

Both your invoice and ledger would include VAT where applicable. Please note we have not used it in this example for explanatory purposes.

Sales Retention >

Record the full value of the invoice, using the invoice date

From Sales, select Sales Invoices.
Select New Invoice.
Enter the full invoice details, ensuring to enter the net value of the invoice (in this case £10,000.00 excluding VAT). The full value of the sale will record on the sales ledger.
Include a second line with the retention included. Enter this as a minus figure.
Using our example, if the retention was 10% enter this as -£1,000.
This also needs recording in an appropriate asset nominal ledger.
Select Save.

NOTE: You should record the retention to an appropriate ledger account. Or create one if required.

When the retention is paid, raise another Sales invoice

From Sales, select Sales Invoices.
Select New Invoice.
Enter the retention amount from the previous invoice.
Ensure you include the amount plus VAT. You should use the asset Ledger associated with the main invoice.
Select Save.
Once saved select Record Payment.

Purchase retention >

Record the full value of the invoice, using the invoice date

From Purchases, then select Purchase Invoice.
Select New Invoice.
Enter the full invoice details, ensuring to enter the net value of the invoice.
The full value of the sale will record on the purchases ledger.
Include a second line with the retention included. Enter this as a minus figure.
Record this in an appropriate asset nominal ledger.
Select Save.

NOTE: You should record the retention to an appropriate ledger account. Or create one if required.

When the retention is paid, raise another Purchase invoice

From Purchase, select Purchase Invoices.
Select New Invoice.
Enter the retention amount from the previous invoice.
Ensure you include the amount plus VAT. You should use the asset Ledger associated with the main invoice.
Select Save.
Once saved select Record Payment.

Solution Properties

Solution ID: 222001000101329
Last Modified Date: Fri Dec 01 16:53:33 UTC 2023
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