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Retainage (retention) withheld by customers or from vendors

Retainage (retention) withheld by customers

The contract with your customer may permit your customer to withhold a percentage of the contract amount until all of the work is completed to their satisfaction. The amount they withhold is called retainage or retention. This is different from retainers. How you handle retainage depends on whether you run accrual basis reports or cash basis reports.

Retainage (retention) withheld from vendors

Your contract with your subcontractor or vendor may permit you to withhold a percentage of the final bill until all of the work is completed to your satisfaction. The amount you withhold is called retainage or retention. This is distinctly different from retainers. How you handle retainage depends on whether you run accrual reports or cash basis reports. Set up an item to record withholding retainage and to pay retainage funds. Point the item to an Other Current Liability account called Retainage Payable. (You may already have a similar Other Current Asset account Retainage Receivable.) If you are running accrual reports, enter a bill from your subcontractor with one item for the full amount and a second item for the negative of the retainage. The difference then goes in to Accounts Payable. Remember that you cannot use percentages on the Bill. If you are running cash reports, enter a bill from your subcontractor with only the amount you are paying now. When you are ready to pay the retainage, enter a second bill for the retainage amount.

KB ID# HOW18906
12/6/2016 6:01:39 AM
QYPPRDQBKSWS08 9138 Pro 2017 c5a7d8