I was wondering whether anybody could please offer any advice on dealing with retentions. I am just about to start work for a new client who is in the construction industry. Some of their customers hold back a percentage of the invoice payment due for up to 18mths.
Currently my client's secretary has been crediting the % retention from the invoice once it has been sent and then re-creating a new invoice for the amount held back when the retention payment is finally received. She said that this stops the books from looking bad!
My gut feeling is that this is incorrect and the retention amount should remain on the customers account so that you have a complete record of Debtors, but as I have no experience at all of this situation I may well be wrong.
I have found this information from SAGE which makes sense:
How to set up and record a retention
- Record the full value of the invoice less the amount of retention using the invoice date.
- Record the value of the retention as an invoice using the due date of the retention.
- Post the customer receipt for the full amount less the retention.
- When the retention is paid record the remaining receipt.
Does anybody else use this method for recording retentions?
Edited at 06 Aug 2020 07:43 AM GMT