What is Retainage: Retainage is usually 10% of the overall subcontract amount and it is a way to ensure that the project is completed before you release the final payment (aka “retainage”) to the sub. Once the project is complete retainage held is released and final payment is made to the sub. Some people do partial retainage release (like taking it from 10% down to 5%, then the final payment). In all cases, the retainage release happens in Sage and there is nothing left to do in Paperless because we already accounted for it on each invoice entered from that sub. For example, if I issue a sub, a contract for $100,000…the retainage would be $10,000. Each time the sub bills me (send me an invoice) I hold a 10% retainage from it. If they bill be for $15,000….I enter the invoice as $13,500 & $1,500 retainage. When this invoice is exported the $13,500 goes into open AP. The $1,500 goes into Retainage Payable and is basically “on hold” in Sage until you release it to be paid at which point it converts to Open AP and Retainage Payable goes down to $0.
In Sage 100, most companies would enter the “retainage/holdback” on each invoice entry (as shown below). When this invoice is exported to Sage, the net is due in open AP. The Retainage amount is held and accumulated in AP. At the end of the project, you have 10 invoices that you’ve paid and each of them had retainage…the amount of all 10 invoices is now sitting in Sage as Retainage Payable. In Sage 100, they will go through and “release” the retainage when they are ready to pay it out to the sub/vendor.
While most companies would do this as outlined above, the downside is there is no “retainage invoice” to route around for review/approval to pay it (no need since you already accounted for retainage on each pay app).
Companies who want to route around a “retainage” invoice for review & approval and export to Sage 100 would have to change how they enter the invoice. Instead of entering the retainage on each invoice…they would instead enter the $15,000 invoice as $13,500 with NO retainage. Then at the end of the project, they would enter an invoice for the full retainage amount, route it for approval, export it to Sage 100, and pay it as usual.
