Retention Handling

WorkGuru provides an automated workflow to handle the complexity of claiming retentions for your projects without requiring any double handling in your accounting system.

• Pre-requisites
• Holding Retentions
• Claiming Retentions

Pre-requisites

• A liability GL account in your accounting system to use for the retention claims.
• Create two NonStock products, ensuring both product's Sales Account is assigned to the retentions GL:
  • Retentions Held
  • Retentions Claimed
• Add the Retentions Held as a negative value line item and the Retentions Claimed as a positive line item to the relevant projects and/or project templates. 

When set up correctly, the retention line items should not add a cost, or increase the billable value of the project. An example of a project that requires a 10% retention claim would be setup like the following:

Note: The retention line items can also be configured with the appropriate tax settings as mandated by your retentions requirements.

Holding Retentions

At the appropriate time, edit your project to update the retention value if required. Raise the invoice as per your normal invoicing workflow and ensure that the Retentions Held line item value is correct and a negative value. Remove the Retentions Claimed line item as we are not claiming this amount at this time.

When the invoice is sent through to the accounting system, WorkGuru will correctly configure the revenue line and the retention line as a negative liability (an asset) on the balance sheet. This ensures you are tracking both correctly while still maintaining the correct invoice total so the accounts receivable value is what the client needs to pay.

Once a project is in a retention period, recommended project management steps are: 

• Set the project to a "Retention" or equivalent project status.
• Set a to-do or a scheduled task to track the end of the retention period and to finalize the project with the retention claim.
• Only mark the project as completed once the final retention claim has been finalized.

Claiming Retentions

Once the retention period is up. To claim the retention, simply raise an invoice for the Retentions Claimed amount. Remove or include the other line items as required to display on your invoicing templates etc.

This will reverse the negative liability (asset) amount in the retentions liability account and track the full project invoice value as revenue.

Manual Retention Handling

If this retention workflow does not suit your requirements, there is another workflow available to handle your retentions manually via credit notes.