Adding the Retention Policy levels to your Head Contract.
Introduction
Setting up your Retention policy for a Head Contract defines how much of each claim is retained in a trust account until the completion of the Project.
The system has a default retention policy with one level. You can edit this for your own Default Retention Policy and that will then be used when you create new Head Contracts.
Then for any new Head Contract, you can specify the Retention Policy and retention levels that you want for that Contract as you have agreed with your customer. You can set different levels and percentages for the Retention Policy, which is unique to this particular Head Contract.
You should have General Ledger codes set up for retentions, one for Head Contracts and one for sub contracts.
The codes are set here:
- For Head Contracts: Head contract retention general ledger account.
- For Sub contracts: Subcontract retention general ledger account.
These General Ledger codes are used to code the retention amounts for Receivable invoices on your Head Contract, and for Payable invoices to your Supplies on your Sub contracts.
In your Head Contract, when a Receivable invoice is created, a separate line item for the retention amount is created on the invoice.
In your sub contract, when you approve a payment claim and create a BCTI or click Use this claim as invoice option, the invoice is coded and the retention is calculated and separated to its own line.
If you are using the Lentune General Ledger, then the respective retention amounts are posted to the correct General Ledger codes for your General Ledger reports.
NOTE: Adjusting Retention Levels
You can adjust your Retention levels until you have a claim at the stage of Prepared or Approved and the claim is in the range of a specific retention level. If a claim is Prepared, then the percentage for that level of retention cannot be adjusted. Higher levels may still be adjusted if there is no existing claim that falls within their range.
If you need to adjust a level that affects a Prepared Claim, you can roll back that claim to the draft status, adjust the percentage for the retention, and re-prepare the claim. This avoids the possibility of retention amounts not balancing at the end of the contract. This applies to Head Contracts and Sub Contracts.
Set up the Retention Policy
You can add multiple levels with different percentage values. For example, you might have:
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10% retention for the value of the Head Contract from 0.00 to $100,000,
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8% for $100,000 to $10,00,000, and
- 5% for everything above that.
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To set this up:
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Go to Payment Claims > Head Contracts.
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Select your Head Contract.
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Go to the Details tab.
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Click Retention Policy.
On the Retention Policy screen:
- Click on the default line to edit this level for the Contract.
Now you can customise the levels as you wish, e.g.:
- Min amount: Enter the minimum amount for this level, e.g. 0.00.
- Max amount: Enter the maximum amount for this level, e.g. 100,000.00.
- Percentage: Enter the Percentage for this level, e.g. 10.00.
- Click Save.
You can add as many levels as required for this Head Contract. To add a new level:
- Click New retention level.
In the Retention Policy Level screen:
- Add the Min amount, Max amount and Percentage for the new level.
- Click Save.
Continue to add further levels as you require. When you have added all levels that you need:
- Click Finish.
- Click Save and Close.
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Last updated: 13 February 2024