# Using sale Retentions for project sales

KB401

### Overview

Retentions are often used in the construction industry. They are usually calculated as a fixed percentage of the total account payable for a contract but may also be set as a fixed amount specified in advance. This amount is withheld to serve as a security that the contractor will complete the contract in full and on schedule. The retention is held either until completion of the project or for a defects liability period which is outlined in the contract.

With the following setup and process, you’ll be able to use a “Retention” item on the Sales order that is automatically recognised on the “Progress Claim” you send to customers and utilise existing reports to keep track of retentions that are due to be called upon at the end of the liability period.

Any Sales order that has outstanding retentions will show up as “on backorder”.

### Setting up Accentis to use retentions

To use retentions within Accentis, you need to create an item titled RETENTION (Item code “Retention”) to which you can assign value on a Sales order or Dispatch, and a Trade Debtors (retentions) account.

##### Create the Trade Debtors (retention) account

1. Create a new Account code in your General ledger “Trade Debtors (retentions)” Type: “Normal”. Most would agree this is an Accounts receivable so is normally setup as an Asset account.
2. Give the Account the same Parent account as the parent of your Trade Debtors Account

##### Create the RETENTION item

1. Create a new item code RETENTION (the spelling is important – this will be recognised by the Progress Claim Crystal report).
2. Set this item up as:
   1. Nonstock
   2. Base unit: $
   3. List price: -$1
3. Add the item to every Warehouse
4. Set the Sales account on each of the warehouses to the new account: “Trade debtors (retentions)”
5. Select the Setup Tab checkboxes:
   1. Do not apply discount structure to this item
   2. Do not allow rebate calculations on this item
   3. Ignore all quantity warnings for this item
   4. Allow this item to be over-dispatched

### Entering in the Sales order

#### Create a new Sales order.

You can add all usual items that would normally go onto the sales order. You can use item codes like “CONTRACT”, “SALE”, “SERVICES”, etc.

##### Add the item code Retention to the Sales order with a quantity of ZERO.

Set this to zero because you don’t want this to affect the total on your sales order and by the end of the retention period, you want to end up with zero retentions outstanding. When you dispatch this item, the amount will be a negative so the “Retention” item will withhold the desired amount on your progress claim. Notice the value of a retention is -$1; that is, retentions are always negative.

If you know the future dates and amounts of retentions; enter these to the Sales order line Delivery schedule so you can use the “Dispatch required items” button on the Dispatch. This will populate the dispatch qty/amounts according to the schedule dates (in relation to today’s date).

### Making the progress claim

##### Create a new Dispatch (progress claim) for the Sales order

This is the progress claim and contains the quantity of completed items.

##### Add a value for the retentions item

This represents the amount retained from the progress claim which will be a negative value.

### Receiving money and issuing an invoice

##### Go to the original progress claim that was made and adjust where necessary

In some cases, the progress claim involves back & forth negotiation with your customer to agree on the amount they will pay. Once agreement is reached; adjust the dispatch aka progress claim – to match the value accepted by the customer. The progress claim is a handy step in the process which avoids the need to edit your Sales invoice where changes are needed.

##### Create a new Invoice from the progress claim

Use Action > Create invoice – this invoice will now match the amount to be receipted (or has been receipted) because you have adjusted the claim values.

##### When the customer pays you prior retentions, create a new (positive) retention invoice

Go to the original progress claim (Dispatch) for the negative retention and select Create Dispatch return. This will be like a reversed progress claim and will allow you to add the amount of retention that is being returned to you.

This will only be applicable for sales orders and retentions that have been done using this method. After updating the Dispatch Return, go to Action > Create invoice and create an invoice.

##### Add receipt (customer payment) and allocate it to adjusted claims and any reclaimed retentions

Allocate the amount on the receipt taking up unallocated progress claim amounts PLUS any retentions that have been paid back.

### Deciding which figures you want to see in your BAS

##### If you want to see the whole income (not less the retention deduction)

- Make sure the tax code for retentions is NOT reportable.
  - This is done in your tax code setup.
- Make sure the income account for retention does NOT post to an income account.

##### If you want to see the net amount (including the retentions credit)

- Make sure the tax code for retentions is REPORTABLE on the BAS.
- Make sure the income account for retention posts to an income account.
  - This means that the P&L will show the lesser amount.

### Benefits

The outstanding job retention amounts report SA3840 will at a glance tell you which jobs have outstanding retentions, and if you use the delivery schedule on the sales order for retentions (dated when the retention period has expired); you’ll be able to use SA1227 Sales order backorder listing (detailed by order line) filtered by item code “Retention” to track when retentions need to invoiced to your customers.

After a job has been completely finished and all retentions paid back, the Sales order will be complete, and no items will be on “backorder”.

You can create retention claims whenever you want – either due to a receipt from a customer or because the retention period has expired.

A retention claim relates to the original progress claim from which it was held. By using this process and the Retention item, you can see on reports who has held what amounts from exactly which claims and when.

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Last edit 15/08/25