In Advantage Financial, retainage can be paid out throughout the life of the Award, or upon completion of the Award. The accounting entries posted will vary depending on the payout method selected. The Retainage Payout process is a group of batch jobs that will automatically select and create documents to release or forfeit retainage.
The Retainage Payout chain process will generate a Retainage Payment Forfeiture (RTGPF) document. The Payout Method, Schedule Payment Date, invoice as well as the other fields in the Payout Terms sections on RTGSUM will be completed on the document through the batch process. The field values will be displayed on the corresponding section of the document. For example, the Payout Method, Requested Schedule Payment Date, and request release amount will be updated to the document Header. The event type, based on the payout method selected, will be updated on the onto the accounting line section.
Upon successful submission of the RTGPF document, the document will create new record(s) on RTGPAID and perform the standard document updates. Also, the document will update the corresponding records on RTGDET and RTGPAID.
The funding elements on the Payment Request are based on the original expenditure and/or the information stored on the Post Award document. For release of Retainage, the Retainage Payout process will use the FIFO (First In, First Out) method of retrieving the original expenditure accounting line. The first expenditure accounts in the retainage bucket are the first ones out of the bucket.
All expenditures related to an Award with Retainage Terms are maintained in the system until the Award is closed.
An Award is not considered closed until the Award terms have been satisfied and retainage has been fully paid out.
All Payment Requests that reference an Award are linked to the Award, as long as the Award is still open. This will allow you to access the Payment Request for inquiry, as well as provide the payout process to retrieve the original expenditure and the retainage held against it. Each payout against the original expenditure should reduce the retainage withheld and the difference stored for the next payout cycle. If the Payment Request is ‘Memo’ referencing an Award that has retainage terms, the Payment Request should not calculate retainage.
The retainage payout must be to the original expenditure accounts.
Forfeiture of retainage is calculated base on the FIFO method or by the terms established on the Fund. This choice is entered by the Retainage Forfeiture Option (RET_FORF_OPT) on (APPCTRL) table. Please see "Retainage Setup" section in this guide for more information.
Once the Schedule Payment Date, Payout Method and other parameters have been entered on the RTGSUM page, the Retainage Payout process begins the process of selecting the specific expenditures to liquidate for retainage. Advantage Financial offers these possible options (Event Types) for releasing or forfeiting Retainage:
Payout to Vendor or Payout Third Party (Event Type AP03) - Retainage is paid out to the vendor on the Award or a 3rd party that the vendor has selected. If the 3rd party is not a vendor in the system, a 3rd party relationship must be set up on the Vendor/Customer (VCUST) table for the vendor before running the Retainage Payout offline process.
Forfeiture to Expenditure (Event Type AP 20 ) - The vendor has failed to fulfill the Award. The retainage is the property of the Entity, and the Entity chooses to reduce expenditure. The expenditure accounting line should be based on the entries on the original document. The Retainage Payout process will use the Forfeiture to Expenditure event type when the Award fiscal year is less then the current fiscal year.
Forfeiture to Revenue (Event Type AP 21 ) - The vendor has failed to fulfill the Award. The retainage is the property of the Entity, and the Entity chooses to recognize it as revenue. The revenue accounting line should be based on the entries on the original document. The Retainage Payout process will use the Forfeiture to Revenue event type when the Award fiscal year is equal to the current fiscal year.
Forfeiture to Trust and Agency (Event Type AP22) - The vendor has failed to fulfill the Award. The retainage is the property of the Entity, and the Entity chooses to classify to Trust and Agency.
Forfeiture to Trust and Agency - New (Event Type AP23) - The vendor has failed to fulfill the Award. The retainage is the property of the Entity, and the Entity chooses to classify to Trust and Agency - New
Forfeiture to Revenue - New (Event Type AP24) - The vendor has failed to fulfill the Award. The retainage is the property of the Entity, and the Entity chooses to recognize it as revenue – New.
The output of the Retainage Payout process is a General Accounting Expenditure (GAX) document. Assuming there are no errors, and no changes need to be made, the GAX document is processed according to the individual document rules. When the output GAX documents are processed, the Retainage Released/Forfeited field on the Retainage Detail page (RTGDET) is updated with the corresponding retainage released amount for the associated Award documents and the Retainage Unpaid field displays the calculated result of Retainage Withheld minus Retainage Released Amount.
The Retainage Payout process will also make updates to the Retainage Released/Forfeited (RTGPAID) page with the amount of retainage released , Award document information, and Payment Request document information. Please refer to Retainage Released/Forfeited (RTGPAID) in the Inquiries section of the Accounts Payable User Guide for more information on this page.