I am looking for info on how to handle retentions in Reckon Accounts. The help has a guide on how to

Cogar Pty LtdCogar Pty Ltd Member Posts: 1
edited February 2017 in Accounts Business Range
It says to set up a Retentions Receivable account as an Other Current Asset, then a retentions item and to put Retained Earnings as the items account. This cannot be right, surely the Retentions receivable account is the account for the retention item? Then when invoicing the retentions it says to add the $ value into an invoice for the customer using the retentions item, which creates a negative $ value that cant be changed. Anyone else have this set up and working properly?

Comments

  • AdrianAdrian Member Posts: 200
    edited February 2017
    I have several clients that have setup to use retentions.

    The GST is not payable to the ATO until the retention is finally invoiced.
    Want to see the retention amount is a sepearate A/R account with proper aging.

    I have found the best way to handle retentions is:

    Setup a new supplier Retention GST. Set as a tax type.
    Setup separate Retention GST liability account
    Setup separate Retention A/R account.
    Setup GST Tax items for RET retention select Retention GSt supplier, and allocate to the Retention GST liability account when setting up.

    Setup Retention Sales account, and Retention Sales Item linked to the RET tax code and Retention Sales account.  

    From the clients I have dealt with they Invoice the full amount of the claim.
    They receive the payment, less the amount of retention. Then Create an adjustment note reversing out the amount that is going to be the retention, and apply to the original invoice.

    Create a new invoice to the Retention A/R.
    Date same date as the adjustment note. Set the due date to the date when you expect to claim back the retention amount.
    Use the Retention Item with the RET tax code.

    Now you can report separate to your normal Debtors the amounts that are in retention.
    The GST on the retention sits in a separate account.

    When running the Tax Summary Report exclude the RET tax code.

    When it is time to claim the retention, create an adjustment note using the retention item and RET tax code. apply to the retention invoice.

    Create new invoice to the customer for the retention using normal sales items and tax code. 

    Hope that helps


    Adrian

  • Matt00702Matt00702 Member Posts: 1

    Hi,

    Our company delivers projects and are subject to retentions. Typically 10% of each invoice is retained up to a total of 5% of the contract sum. At Practical Completion 50% of the the retention (2.5% of contract sum) needs to be invoiced. Then at the end of the Defect Liability Period the final 50% of the retention is invoiced. I have set up a RETENTIONS RECEIVALBLE account in the Chart of Accounts, which is a Other Current Asset.

    This works well during delivery of the project and the submission of progress invoices as I'm able to deduct the 10% of each invoice and it accrues as an 'other current asset on the balance sheet.

    What I'm having trouble with is the retention claim at Practical Completion as I'm not sure which ITEM or ACCOUNT it should be invoiced against.

    I believe that when the Retention is claimed, that an equal amount needs to be backed out of the Other Current Asset so that it moves out of the Balance Sheet and onto the Profit and Loss, but I'm not sure how this is done.

    At the moment to generate the invoice for the Retention at Practical Completion I've created a RETAINAGE PAYABLE Account as an OTHER CURRENT LIABILITY, which I'm sure is incorrect.

    Help Please?

  • Acctd4Acctd4 Accredited Partner Posts: 993 ✭✭✭

    @Matt00702 I’m not at my PC at the moment but I think I have a guide I put together on this - based on Reckon’s own Help topic - which goes through the correct way to set this up & enables reporting on Retentions Held also.

    It works really well & utilises Discount Item lines to auto-calc the Retention on an invoice .

    if you’d like to email me, I can send it through to you 😊

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    Reckon Accredited Partner (AP) Bookkeeper * Regd BAS Agent (No: 92314 015) *

    ICB-Certified Bookkeeper * Seasonal Tax Consultant since 2003

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    0422 886 003

    [email protected]

    https://www.accounted4bs.com/

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