This recipe provides you with the details of retainage, and discusses how retainage works. It covers the following topics:
Retainage is a process to hold a part of the payment from the supplier. When you create a voucher you can enter the retainage amount / percentage. Retainage is the percentage of a committed amount that is held until a specified date. The retainage can be entered during purchase order entry by specifying the retainage percentage, with the balance amount being specified or confirmed during payment voucher creation. For example if you create a payment for 1000 USD and the retainage percentage is 15%, then the system will hold 150 USD and the actual payment will be 850 USD. You should release the retainage by entering a payment voucher for the amount that you want to release. You can also use the Tax With Retainage processing option to reschedule tax on retainage. When you activate the processing option for Tax With Retainage and if you use a tax type C or V, then the system will compute the amounts throu gh a different method. It deducts the retainage from the actual taxable amount and recalculates fresh amounts. You can release retainage either through a partial release that still leaves an unpaid balance or through a full release, which means that there will be no outstanding balance.
During voucher creation, you can release retainage and create a voucher at the same time. The retainage can be applied to the entire voucher, or can be applied by line item of the voucher.