Payment Terms that Combines Installment and Retainage

[Former Member]

Hi all

My client needs a payment terms that will combine both Installment and Retainage.

They pay the vendor in three installments - 25%, 50% and finally 25% when the job is done. I have configured this in OBB8 and OBB9.

However, they also retain 10% at each step.  I can't figure out how to do this bit.

For example: the entire amount owed is $5000. In installment 1, they need to pay $1,250 (25%), but retain $125 (10%). So pay vendor $1,125 and retain $125 in a Retention account. In installment 2, they need to pay $2,500 (50%) but retain $250 (10%). So pay vendor $2,000 and retain $250 in the Retention account. By the end of the three steps, they will have $500 in the Retention account. They will pay this out to the vendor via a regular AP invoice once they are satisfied that the job is complete.

I can see the config for the Retention GL account (LIV > Incoming Invoice > Retention > Define Control Parameters for Retention), and the Help here suggests that the default used is Special GL Indicator "H" (Security Deposit).

What I cannot see is how to make the retention bit actually work. How would the MIRO or the outgoing payment know to retain the required 10% each time?

Has anyone done this?

Nikki

[Former Member]

Hi Atul

I think I see what is causing my confusion. In OBB9 you define, per installment level, the % amount that you wish to pay (in my case, level 1 is 25% of the total). At the same time, that also means that I am retaining 75% of the total, yes? Hence the description of transaction code OBB9 as Holdback/Retainage - we are holding back / retaining the remaining amounts each time we pay an installment.

So our requirement to basically retain an additional 10% of the original 25% being paid in the first installment is probably impossible to achieve.

Any thoughts on that?

nikki

[former_member192833]

Hi Nikki,

Please refer the link

Regards

Atul