Retainage

Retainage is a critical financial control mechanism in the construction industry that ensures project completion and quality assurance by withholding a percentage of the contract price until project milestones are met. Managing the complexity of modern construction projects with multiple purchase orders and varying retainage agreements with different vendors, requires tracking retainage at purchase order/contract level.

Your Accruent representative can configure Lucernex to track retainage at the purchase order level so that a different retainage percentage is applied to different purchase orders. Over the life of a project, retainage is tracked as a dollar amount deducted from each budget line of an invoice that is paid.

You can enter and edit retainage percentages dynamically. As vendors submit invoices, the correct retainage amount is withheld and accurately reflected in the financial records. This provides a clear record of retainage adjustments for each transaction over the project lifecycle.

Example Purchase Order scenarios:

• Electrician vendor with no retainage

• General contractor with 10% retainage

• Plumbing and HVAC vendor with 5% retainage

• General contractor with 10% retainage for the first 75% of the project and then drops to 5% retainage for the final 25%.

For example, a company contracts another company to complete a project for $150,000 with 10% retainage. This means $15,000 across all budget lines is withheld until project completion when it is and paid as the final invoiced amount. Here are the retained amounts over three Pay Apps Invoice:

First Pay App

Retainage %	10
Budget line	Original contract amount populated from PO	Approved change order populated from CO	Total contract amount (PO+CO)	Invoice amount	Previously retained amount	Retained amount
General requirements	$100,000.00	$50,000.00	$150,000.00	$25,000.00		$2,500.00
Equipment	$50,000.00	$10,000.00	$60,000.00	$1,200.00		$120.00
				$26,200.00

Second Pay App

Retainage %	10
Budget line	Original contract amount populated from PO	Approved change order populated from CO	Total contract amount (PO+CO)	Invoice amount	Previously retained amount	Retained amount
General requirements	$100,000.00	$50,000.00	$150,000.00	$16,000.00	$2,500.00	$1,600.00
Equipment	$50,000.00	$10,000.00	$60,000.00	$800.00	$120.00	$80.00

Third Pay App

Retainage %	10
Budget line	Original contract amount populated from PO	Approved change order populated from CO	Total contract amount (PO+CO)	Invoice amount	Previously retained amount	Retained amount
General requirements	$100,000.00	$50,000.00	$150,000.00	$3,800.00	$4,100.00	$190.00
Equipment	$50,000.00	$10,000.00	$60,000.00	$10,000.00	$200.00	$500.00

Payment Application Invoice Retainage

When you create a new Pay App, select the Vendor and related Purchase Order, the Original Retainage is set to the value on the related Purchase Order. You can edit the value if required.

Workflow

If your Pay App workflow has a step that requires you to copy budget cost, the Retainage Amount from the previous invoice is included in the calculation as the Previous Retainage Amount. The Retainage Amount on this invoice is the Previous Retainage Amount on the next invoice.

• When you deactivate a Pay App Invoice workflow BEFORE copying the value to the budget, the retainage amount is not carried over to the next Pay App.

• When you deactivate a Pay App workflow AFTER the value is copied to the budget, the retainage amount is carried over to the next Pay App.

Set up Retainage

This section describes specific fields you can add to your layouts to support Retainage. Contact your Accruent representative to help you set up Retainage in your firm.

Auto populate previously retained amount on Pay App

1. In the System Administration Dashboard, click Manage Custom Lists.

2. Expand your Payment Application custom list.

3. In the Actions pane, click Edit in the action where you want the Retainage amounts to populate.

4. In the dialog that opens, select Auto-populate Purchase Order Lines if not already selected.

5. In Retainage, select Retainage Amount.

6. In Prev. Retainage, select Previous Retainage.

7. To reduce retainage when there is no value to invoice, select Copy retainage for $0 budget values.

8. Click Update Layout.

Add Layouts

Add these fields to your form layouts:

• Original Retainage: Record the percentage of payment amount on the original Purchase Order to be withheld from vendor until project completion.

  • Purchase Order

  • Payment Application

• Invoice Retainage: Percentage of payment amount on Invoice to be withheld from vendor until project completion.

  • Payment Application

1. In the System Administration Dashboard, click Manage Forms.

2. Expand the form that you want to edit.

   Click Build layout in the form layout you want to edit.

3. In the leftmost pane of the dialog that opens, expand Related Fields > Specialized Forms.

4. Do one of the following depending on the form you are adding to:

   • Expand Purchase Order then drag Original Retainage to the layout.

   • Expand Payment Application:

     1. Drag Invoice Retainage to the layout.

     2. Drag Original Retainage to the layout.

5. Click Save Layout.