How is Accounts Receivable Retention Handled in Sage 100?


How Accounts Receivable Retention is handled
Calculating retention


The Accounts Receivable system allows you to specify a portion of an invoice amount as retention so customers can withhold these amounts from payment until the completion of the job. This feature can be activated by selecting the Track Job Cost Retention Receivables check box in Accounts Receivable Options.

The Standard retention percentage rate can be specified for each job.  The retention rate can be used in Job Posting Entry, Job Billing Data Entry, and Accounts Receivable Invoice Data Entry to automatically calculate the amount to retain.  A retention amount can be calculated and tracked for each invoice until the invoice has been fully paid.  The Accounts Receivable Aged Invoice Report, Trial Balance Report, and Cash Expectation Report list the retention balance, which is included in the invoice balance.

The calculated retention can be overridden manually during data entry.  The retention amount is calculated by multiplying the total billable amount for the invoice by the retention rate

Applying Accounts Receivable Retention

When an invoice with retention is first entered, the net invoice amount (invoice balance minus retention) is debited to the Accounts Receivable account, and the retention amount is debited to the Retention Receivable account.  You must specify the Retention Receivable account to use in Accounts Receivable Division Maintenance.  If you do not want to post retention separately, use the same General Ledger account for both the Accounts Receivable and Retention Receivable accounts.

When a payment for an invoice is received, it is assumed that the Accounts Receivable balance is applied before any payment is applied to the retention balance.  This means that any partial payment that does not fully pay the invoice is first applied against the Accounts Receivable account until the invoice balance is equal to the retention amount.  Any additional payment is applied to the Retention Receivable account.

Sales Tax and Retention

Certain tax jurisdictions require sales tax to be calculated on the amount billed less retention and to have tax calculated on retention invoices.  To do this, select the Calculate Sales Tax on Retention Invoices check box in Job Cost Options and select the Calculate Sales Tax on Retention check box in Library Master Sales Tax Code Maintenance for each applicable tax code.

Processing Retention Invoices

When a retention invoice is processed, the previously billed retention balance is transferred from the Retention Receivable account to the standard Accounts Receivable account, and a new invoice is created to reflect the full invoice amount.  Retention amounts are cleared from all of the customers’ invoices for the same job, and the remainder of the Job Cost retention total, if any, is recorded as the retention amount for the new retention invoice.  Retention invoices are typically processed at the completion of the job to request the payment of the retention balance that has been accumulated for the job.

You can enter retention invoices using Job Billing Data Entry by entering the invoice number followed by -RT.  The Amount Billable field on the Job Billing Data Entry Totals page defaults to the retention-to-date balance for the current job.  You can override the default amount billable.  The Less Retention field is not applicable to a retention invoice.  For Time and Material jobs, the Lines option is not available when recording a retention invoice.

During the Job Billing Register update, a new invoice is created with the extension of -IN in the Accounts Receivable Open Invoice file.  The retention amounts are cleared from all of the customers’ invoices for the same job.  If the retention amounts cleared from the invoices exceed the retention invoice amount, the remainder is recorded as the retention amount for the new invoice.  The General Ledger Retention Receivable account is credited with the invoice amount and the Accounts Receivable account is debited.

Additional Information

Note: If Job Cost is not integrated with the Accounts Receivable module, use Job Posting Entry to enter billing and retention information.  Retention is not tracked by invoice in this case; however, the total retention balance is kept for each job.

Note:  Retention invoices do not affect the Work-in-Process or Job Revenue accounts during the Job Billing Register update.


If necessary, seek the assistance of Acute Data Systems to help provide assistance with this process.