Establish Retainage Terms
Retainage in Advantage Financial begins in the procurement cycle, but the accounting events occur within the accounts payable cycle. In order to initiate the retainage of funds, you must first establish the Retainage Terms on the Award transaction (namely, Purchase Order “PO”) at the Commodity Line level. Award transactions with retainage terms can be viewed by Commodity Line on the Retainage Summary table.
When an Award is established in Advantage Financial, it is determined if the Commodity(s) on the Award are subject to the withholding of retainage. If a commodity is subject to retainage, the Retainage Terms are established on the Award transaction. Retainage Terms must be established at the line level for each Commodity on the Award that is subject to Retainage. Any changes that need to be made to the Retainage Terms of a commodity line on an Award (prior to Award approval) must be changed on the Award transaction. Retainage Terms can be viewed on the Retainage Summary by Commodity Line table and Retainage Detail table. Once the Award has been approved and processed, Retainage Terms can be changed, by modifying the Award transaction.
Retainage can be withheld using one of, or a combination of the following methods:
Percentage of Percent of Invoiced Amount - This method is implemented by filling in the greater than and less than or equal to percentage to retain in the Percentage rows. The retained amount cannot exceed the commodity line amount. Up to five ranges can be specified. For example, if less than 40% of an Award has been invoiced, 10% is withheld. If more than 40% but less than 60% has been invoiced, 5% is withheld, etc. You must enter the percentages that are applicable.
Percentage of Dollar Amount of Invoiced Amount - This method is implemented by filling in the greater than and less than or equal to percentage to retain in the Dollar rows. The retained amount cannot exceed the commodity line amount. Up to five ranges can be specified. For example, if the amount paid on an invoice is less than $25,000, retain 5%. If the total amount invoiced is greater than $25,000 but less than $100,000, retain 2%, etc. You must enter the percentages and dollar amounts that are applicable.
Dollar Amount of Percentage Invoiced Amount and Dollar Amount of Dollar Invoiced Amount - For example, if invoice is less than 50%, retain $10,000 or Retain $10,000 if invoice is less than $50,000. This method is implemented by filling a dollar amount range and, instead of a retained amount, fill in a percentage to retain in the Retain % field. On the other hand, you can fill in a retainage percentage range and an amount in the Retain $ field.
Lump Sum Figure - A one-time lump sum amount can be retained. If this method is used, you only need to enter a total dollar amount in the Retain Amount 1 field. When you enter a lump dollar amount, say $25,000, the system will retain all payments until this threshold is reached.
Refer to Retainage Summary by Commodity Line and Retainage Detail topics for more information on this page.
