Retainage Module

Overview

ServMan’s Retainage Module should be used in conjunction with the Progressive Billing Module if you have large construction jobs that span a number of months or years until their completion. 

What is Retainage?

Retainage is a portion of a project's price which is withheld until the work is complete.   The concept of retainage provides an incentive to the contractor or subcontractor to complete the project as well as protects the owner against any liens, claims or defaults, which may surface as the project nears completion.   The amount withheld from the contractor or subcontractor should be determined on a case-by-case basis, and is usually based upon such factors as past performance and the likelihood that the contractor or subcontractor will perform well under the contract.

There are two types of retainage; A/R retainage that your clients require of you and A/P retainage that you may require of your vendors.  ServMan’s retainage module provides you with a solution for handling both.  This section will explain the proper setup and use for both managing your retainage on billings to your clients (A/R Retainage) and tracking your retainage invoiced to and owed by you to your vendors (A/P Retainage). 

Learning Objectives:

After completing this session you should understand how to setup, manage, and monitor retainage in ServMan.  Specific learning objectives include the following:

• Purpose of Retainage

• Requirements for A/R Retainage

• Invoicing Retainage

• Requirements for A/P Retainage

• Managing A/P Retainage

• AIA Progressive Billing

• Standard Progressive Billing

Prerequisites:

• Back office ServMan must be at Version C.54 or later

• Please have your ServMan project manager activate the following settings:

USE_RETAINAGE_AR=1

USE_RETAINAGE_AP=1

Setting must be placed in the each company file not the root.

A/R Retainage Setup

Create an A/R GL Code for Retainage

The retainage receivable account is a subaccount within accounts receivable. It is a short-term asset account with a natural debit balance on the balance sheet. Under accrual accounting, a contractor posts a debit to the retainage receivable account when it fulfills the obligations tied to the retainage.

• Enter the GL code

• Select Accounts Receivable from the dropdown

• Enter a description for this GL Code

• No other information is necessary

 Add Company-wide default retainage GL codes

•        Select  Utilities > Program Settings/ Defaults from Menu Bar

•        A/R Settings tab 

•        Enter the A/R Retainage GL Code

•        Enter the Default A/R Retainage % field

•        Enter the Default Stored Materials Retainage % field

Add retainage GL Codes to Branches, if branches are used

• From Master Files -> Miscellaneous -> Branch File -> A/R Settings Tab
• Enter your retainage GL Code, Default A/R Retainage % and Default Stored Materials Retainage %
• NOTE: ALL Branch default setting override the Company default settings
• NOTE: There is no branch A/P Retainage setting

See Also - Invoicing Retainage

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A/P Retainage

A/P Retainage may be set as a default at the vendor level, entered directly on a PO at creation, upon receipt of goods or directly on a bill received from the vendor.   All retainage fields are editable at any stage of the process.  

A/P Retainage Setup

Create an A/P GL Code for Retainage

The retainage payable account is a subaccount within accounts payable.

• Enter the GL code

• Select Accounts Receivable from the dropdown

• Enter a description for this GL Code

• No other information is necessary

Vendor Default Retainage Setup

Setting up the retainage on a vendor will calculate the retainage amount on ALL bills received from the vendor.

On the Purchasing Default tab:

1. • Check the Withhold Retainage checkbox
   • Enter the Default % retained
   • Enter the A/P Retainage GL account number

Retainage entered directly to a PO:

• Check the Withhold Retainage checkbox in the bottom right corner of any PO
• Enter the A/P Retainage GL Account
• Enter a retainage % to calculate the Retainage and Total Due fields
• OR
• Enter a retainage amount directly into the Retainage field and press Save to calculate the Total Due field

Enter retainage when entering a bill or receiving a PO:

• Select Receive PO from the Purchasing navigator
• OR
• Select Enter Bill/Receive PO from the A/P navigator
• Enter the Vendor ID and select the PO number you are receiving
• NOTE: If Withhold Retainage was checked on the PO, when you receive the items, ServMan will calculate the amount based upon the original PO retainage fields.  You may override these accounts should the actual bill reflect a different amount.  
• NOTE: There is a Retainage Balance that will appear at the bottom of the screen with a picker button next to it.  Pressing the picker button will take you to the A/P Manage Retainage Screen.

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Managing A/P Retainage

The Manage A/P Retainage screen displays all retainage history for the vendor, along with the current balance

• Additional adjustments may also be made from this screen

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Work Order Retainage

Retainage can be set on any work order simply by entering a retained amount in the Retainage field at the bottom right corner of the Work Order Setup screen.

• NOTE: This is NOT recommended by ServMan though the ability does exist.  

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