How do I add retention to an invoice? this retention is in relation to the monies retained by contractor which can then be released upon completion of the job

acousticceilings · ‎February 07, 2019

We are a UK LTD company working in the construction industry.

Some contractors we invoice keep a retention amount until the job is completed which we then have to apply to be released at a later date... is it possible to show this amount on an invoice as it is issued or as payment is made? or possibly to issue an invoice at a later date solely to release the retention?

JessT · ‎February 07, 2019

Hi acousticceilings!

I’ve got the steps to help you add a retention amount on your invoices. And yes, it’s possible to show the amount when you issue them. I’m glad to show you how.

Setting up retainage tracking:

Create a Retainage account:
a. Click the Gear icon.
b. From the drop-down menu, select Chart of Accounts.
c. In the Chart of Accounts, click New.
d. For Category Type, select Other Current Assets.
e. For Detail Type, select Retainage.
f. For the Name, enter Retainage Receivable.
g. Click Save.
Create a Retainage item:

a. Click the Gear icon.
b. From the drop-down menu within the Lists section, select Products and Services.
c. In the Products and Services window, click New.
d. Enter a Name for the item (i.e. Retainage).
e. Under Sales Information, place a check-mark next to I sell this product/service to my customers.
f. Select the Retainage Receivable account from the Income Account drop-down.
g. Click Save.

Withholding retainage from an invoice:

Click the + symbol located at the top of the screen.
Select Invoice.
Select your customer.
Fill out the remaining fields of the invoice, including the purchased line items.
On the next available line of the invoice, select Retainage from the Product/Service column.
In the Rate column, enter the amount of the retainage as a negative (-) number.
Note: If your retainage is a percentage, you must calculate this manually.
Click Save and Close.

In case you need a report in the future, you can follow these steps:

Click the Gear icon.
Select Chart of Accounts.
Click once on the Retainage account line, to highlight it.
Click the Report button, in the top-right corner.
Click Customise, located in the top-left corner of the report window.
Under Row/Columns, change Group By to Customer.
Click Run Report.

You can save this report, so you won't have to do a lot of customisation when you need it in the future. For instructions, you can refer to the Memorised Reports article.

Feel free to come back here if you need anything else. Thanks!

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nelbach · ‎February 07, 2019

Quickbooks Pro 2018 won't let me assign Retainage Item I created as Other Current Asset for the Retainage Receivable account I created ?????????????????? Please advise.

JessT · ‎February 07, 2019

Hi acousticceilings!

I’ve got the steps to help you add a retention amount on your invoices. And yes, it’s possible to show the amount when you issue them. I’m glad to show you how.

Setting up retainage tracking:

Create a Retainage account:
a. Click the Gear icon.
b. From the drop-down menu, select Chart of Accounts.
c. In the Chart of Accounts, click New.
d. For Category Type, select Other Current Assets.
e. For Detail Type, select Retainage.
f. For the Name, enter Retainage Receivable.
g. Click Save.
Create a Retainage item:

a. Click the Gear icon.
b. From the drop-down menu within the Lists section, select Products and Services.
c. In the Products and Services window, click New.
d. Enter a Name for the item (i.e. Retainage).
e. Under Sales Information, place a check-mark next to I sell this product/service to my customers.
f. Select the Retainage Receivable account from the Income Account drop-down.
g. Click Save.

Withholding retainage from an invoice:

Click the + symbol located at the top of the screen.
Select Invoice.
Select your customer.
Fill out the remaining fields of the invoice, including the purchased line items.
On the next available line of the invoice, select Retainage from the Product/Service column.
In the Rate column, enter the amount of the retainage as a negative (-) number.
Note: If your retainage is a percentage, you must calculate this manually.
Click Save and Close.

In case you need a report in the future, you can follow these steps:

Click the Gear icon.
Select Chart of Accounts.
Click once on the Retainage account line, to highlight it.
Click the Report button, in the top-right corner.
Click Customise, located in the top-left corner of the report window.
Under Row/Columns, change Group By to Customer.
Click Run Report.

You can save this report, so you won't have to do a lot of customisation when you need it in the future. For instructions, you can refer to the Memorised Reports article.

Feel free to come back here if you need anything else. Thanks!

shunhe_pl · ‎February 07, 2019

1. Tried the solution and found that 2f. above should be "Retainage Receivable" instead of "Retainage Payable"?

2. Read on other website articles that this solution will result in Sales/Income to be the actual invoiced amount (before retainage is applied). Checked and this is true. In case you need to reduce the retainage in Sales/Income, how is it done?

Abacus Book-keeping Consultancy · ‎November 05, 2019

It may be worth noting that before these procedures can be followed, that it is necessary to switch 'discount' to On within the Sales Form Content section, this is in the Sales page in Account & Settings chosen from the Gear Icon

kg2020 · ‎December 26, 2019

What do you do when it is time to receive payment for the retainage? It is sitting in the "other asset" but has not really been billed since the invoice total is lowered by the negative amount entered. Thanks.

Rose-A · ‎December 27, 2019

Hi, kg2020.

To change the posting account of the retainage, you can create a Sales Receipt or apply it to an open invoice.

Below are the steps to complete the process:

Click the +New in the left panel and select the Sales receipt.
Select the Customer name from the drop-down.
From the Deposit to ▼ drop-down menu, select the separate account you created for retainage, your main operating account, or the account this money will be kept in.
In the Product/Service column, select the Retainer or Deposit item you set up.
Enter the amount received for the retainer or deposit in the Rate or Amount column.
Select Save and close.

For detailed information and additional recommended steps (proceed to Step 4), check out this article: Record a retainer or deposit.

Also, I'm including this article for your other reference: How to view Retained Earnings account details.

I appreciate your time today. Please know that I've got your back if you need help with QuickBooks.

OKFirePro · ‎July 13, 2020

Should you choose a "class" for retainage? I've been using revenue, but that can't be correct, any help would be appreciated.

Mary102 · ‎January 21, 2021

How do I receive the retainage when the customer pays it. How come the retainage does not show up in the customers account as money owed?

IamjuViel · ‎January 22, 2021

Hello there, @Mary102.

You'd want to create a retainage payable account on your Chart of Accounts. Let me show you how:

Go to the Accounting menu.
Choose the Chart of Accounts tab.
Click New.
Under the Account Type drop-down menu, select Other Current Liabilities.
On the Detail Type drop-down menu, choose Other Current Liabilities.
In the Name field, enter Retainage Payable.
Click Save and Close.

Once completed, you can create a retainer service item. You can use it in creating a sales receipt or an invoice to record the amount you've received from your customers. Here's:

Choose the Gear icon ⚙.
Select Products and Services.
Click New.
From the Product/Service information panel, pick Service.
Enter a name for the new product or service item (ex. Retainer).
From the Income account ▼ drop-down menu, select Trust Liability Account.
Click Save and close.

You can read through this article for more detailed steps: Record a retainer or deposit.

Leave a comment below if you have other questions or concerns about tracking your income and expense transactions. I'm always here to help.

kmorris1117 · ‎March 08, 2022

The Retainage Receivable account is not showing a balance once I run a report. this is using QBO. please help

JasroV · ‎March 08, 2022

I'd be delighted to share some insights on how to get isolate this issue and get the balance of your Retainage Receivable account, @kmorris1117.

You'll want to ensure you filter the date range of the report accurately to show the balance of your account. Otherwise, you can access your QuickBooks Online (QBO) account in a private or incognito window.

This way, we can verify if this is a browser cache issue. Too much data stored cache from the browser can affect the views and performance of your account.

Using a private window help us isolate the issue as this doesn't save any data files. To open an incognito mode, you can refer to these keyboard shortcuts

Ctrl + Shift + N (Google Chrome browser)
Ctrl + Shift + P (Mozilla Firefox & Microsoft Edge browsers)
Command + Shift + N (Safari browser)

If you’re able to view the balance of your account when running a report, I’d suggest clearing your regular browser's cache. If the issue remains, I recommend using other supported browsers. This way, we can check if this is a browser-specific issue.

I've also collected these resources that you can read for reference in managing your reports and accounts:

I'll be around whenever you have other follow-up questions about your reports and accounts. Just add them in your reply and I'll take care of them for you. Stay safe!

dupreecon · ‎August 04, 2022

I was hoping to find a better solution to what I do, but I don't see anything. My solution isn't ideal by any means, but it works. I create my invoice with 100% of the billed amount. Then I add item discount and enter 10% (or whatever the retainage is). I send that invoice to my customer. Then I delete the retainage discount line for my records so it back to billed at 100%. When the payout comes, I apply to the invoice and it will show that 10% balance until it is paid. There is no remembering to move the retainage from different accounts which is a big deal when you wait a year or more for the final payment. It would be spectacular if someone had a better way.

Rochelle_ · ‎December 06, 2023

Best Solution so far!

Thank you!

RebeccaTiffany · ‎January 18, 2024

Hi, we do retention exactly this way however, when a $10,000 invoice with -$1,000 retention gets paid $9,000, on the income statement it shows we received the full $10,000 when we only received $9,000. Why is that? Now I am wondering if we have been over reporting income all these years and overpaying income taxes. I've tried to look to see if the income statement deducts it elsewhere but it does not.

Please help very urgent matter

Rochelle_ · ‎January 23, 2024

Hi Rebecca Tiffany,

As dupreecon suggested, as soon as you print the invoice, go back and remove the discount.

You can even rename "Discount" to "Retainage" (Or Retention), so it shows up on

your invoice as retention like the customer wants to see. But change the discount

amount to zero on the quickbooks invoice after printing.

If you use estimates that's even better. You can add the discount line in the estimate,

use it in the invoice. Print the invoice, then go back and remove it from the invoice

and progress it in the estimate. which will prompt you to put in a "change order"

where you can put notes about how you handled the retainage.

The bummer with this method is you cannot generate retainage reports, and if

you bill in "progress" amounts it messes up your percentages, but that's still way better than

paying taxes on the same money twice!!

Hope that helps!

-Rochelle

Elitemech · ‎April 06, 2024

Why would you have to turn discount on when that's a separate field entirely and not a line item?

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How do I add retention to an invoice? this retention is in relation to the monies retained by contractor which can then be released upon completion of the job