Vendor Payment Retention

Retaining Vendor Payments

Introduction

A common business practice, especially in the building industry, is for amounts to be withheld from contractors until the job is satisfactorily completed. To record and track withholdings from bills in AccountEdge:

1. Create a Liability Account, type Other Liability, named Retentions Payable
2. For Item bills
   • Create a Retainer Withheld item
   • Name the item Retainer Withheld
   • For this item, select only I Buy, linking it to the Retentions Payable account
3. When recording an Item Bill
   • Indicate the total items and amounts, including applicable sales taxes
   • On the Bill, add a line for 1 Retainer Withheld item as a negative quantity, at the Retention amount; including applicable sales taxes
   • Pay the bill in the usual manner (the retention amount will have been deducted from the total item sale amount, and posted to the Retentions Payable liability account)
   • If sales tax is applied, the posted Retention amount will include sales tax
   • Note: If you are making progressive payments, you will need to repeat this process for each payment (except the final payment). However, if you do not retain any further monies after you have made the first payment, you should enter the remainder of the progressive payments without any amount being retained.
4. To pay the retention amount on Item bills
   • Create a bill indicating 1 Retainer Withheld item including its applicable sales tax
   • A Retention amount can be added to an item bill, or billed separately
   • Pay the bill in the usual manner
5. To determine the amount that has been withheld
   • Display the Purchases (Item Summary) report. Set the filters to the Retainer Withheld item only. Set the Purchase Status to All Bills and select the relevant date range.
6. When recording a non-Item Bill
   • Add line items with descriptions and applicable sales taxes, to the bill
   • Add a line item with a description, amount and applicable sales taxes, as a negative number, to the bill, posting it to the Retentions Payable
   • Pay the bill in the usual manner (the retention amount will have been deducted from the total item sale amount, and posted to the Retentions Payable liability account)
   • If sales tax is applied, the posted Retention amount will include sales tax
7. To pay the retention amount on non-Item bills
   • Add line a line item with a description, posting it to the Retentions Payable, as a positive number
   • A Retention amount can be added to a bill, or billed separately
   • Pay the bill in the usual manner
8. To determine the amount that has been withheld
   • Display the Purchases (Vendor Detail) report.