RE: Accounting for retainage
I was wondering if there’s a way in NetSuite to manage/account for retainage. I’ve thought of the following ways:
- Manual journals entries
- Accepting payments to a retainage receivable account
- Credit note item where accounts receivable is credited and retainage receivables is debited
Unfortunately, neither of the above ways is endorsed by the company management. I was wondering if there’s different way to account for it.
I’ve found this resource on NetSuite website, but it doesn’t have anything that would help. I’d really appreciate any help
From an A/R Standpoint bill the customer with two items Services and create a Discount in NetSuite equal to the percentage. Apply the discount and have the discount G/L code to a Retention to a Current Liability not A/R account. The customer will pay only for the A/R amount payment can be posted for the net amount of the invoice and remove it from your Aging report. When it comes time to bill for retention Set up an Item for Retention and instead of mapping the item to sales map it to the same account as the Discount.
From an A/P Perspective – Enter the PO / Contract into Netsuite with for the full amount. When A/P processes the invoice for payment on the expense tab deduct the retention amount and code it to a retention payable account. When you are billed for final retention….. code the bill to retention payable and the entries will clear out.
There ya go!