How is Retention (Retainage) held and released?

***Read this article, How do I set up Retention in a New Project?

How is Retention held?

Once you have set up your Retention in a New Project, every invoice that you create is going to hold the percentage set up in your Project.

See the example below:

In this particular Project (see below image), the value is for $10,000.00 USD and the Retention is set up to 10%.

*** You can get this view from the Projects Module, select the Project of your preference and then click on the Details Option. This is located on the left panel.

*** Under the Additional Details, you can see the Project Details, from Contract Amount to Retention.

The next step, after setting up the Retention is to create your SOV (Schedule of Values).

***You can read this article to know more about the Basics of Schedule of Values.

The SOV can be created in the Schedule of Values option of the left panel of your Project as shown below. You just need to click on “Add Item to SOV” and then you will find different options. In this case, we will create a Manual Project Item called “Total Value of the Project” with a total amount of $10,000.00 USD.

Then, it is time to create a new Invoice. In this case, we will import items from the SOV to the Invoice.

We select the “Total Value of the Project” that we created in previous steps and then we hit the Save & Close button.

Then we determine the percentage we are going to charge of the “Total Value of the Project” as shown below and automatically will be holding the 10% of Retention that we noted when we first created the Project.

How do we release the Retention?

To release the Retention of the Project, at the end of it we will issue a final Invoice.

We create a new Invoice and we click on the menu “Add Item to Invoice”, but instead of bringing items from the SOV, we will use the option “Add Retainage (Partial or Full) for Payment.

Once you click on it, another window will pop up, and in here we will type the percentage that we want to release. Per the previous exercise, our Retention on this Project was for the 10% of the total value of the Project, equal to $1,000.00 USD. Therefore we will type in the box the number “0” (zero). By doing so, the Retention changes from 10 to 0 and the $1,000.00 USD are released. Do not forget to click on the blue button Save & Close.

Then an item name “Retention Invoice” will appear in the last invoice with the total amount that was held during the whole duration of the Project.