Accounts Receivable Retention
The DocuLedger system makes managing Accounts Receivable Retention an easy task. When your business account is created there is an accounts receivable retention general ledger account that is automatically created and along with that account there is a linked voucher code that is tied to this G/L account. When you create a new Job/Project you can establish a default retention percentage rate for the job. When you create a billing charge from the Job Portal pop screen (partial display below) there is a switch that is defaulted to ON to hold back the percentage rate. When the Sales Order is created from the job portal a line for billing is created for the total amount of the services and also a voucher code for AR Retention is created that is linked to the AR Retention G/L account. The Voucher Code line will be a negative line amount for the retention amount and will effectively reduce the receivable and place the reduction in the AR Retention account for the Job/client.
An example of this would be if we have a $100,000 job with an agreed 10% retention and we are progress billing the customer $10,000 based on the completion of some work done. There would be two lines created on the Sales Order. The first line would be billed at $10,000 for the work completed and the second line would contain the voucher code for the retention in the amount of negative $1,000. When doing progress billing this is not something you have to give much thought about since the creation of the Sales Order is automatic based on the information from the Job portal. When nearing the end of the job you will want to review your retention receivables account for that client and that job. From the Job Management portal go to the Retention Control Menu item and select AR Retention details. You will be able to filter on the Job and the Client.
After reviewing the balance for the client and the job in retention if the job is complete you can invoice for the balance in the Retention account by creating a new sales order using the AR Retention voucher code as the line item, linking it to the job and setting the amount to the total in the receivables retention account. Once posted this will reduce the amount in the receivables retention account and increase the amount in the Accounts Receivable for that client.