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Retainage before or after taxes for AR

  • 10 April 2024
  • 4 replies
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R
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Hi group!

Some of our clients take see the retainage in the following way and pay us by calculating everything like this:

Example:
Subtotal: $115,251.47
Total invoice with taxes:: $132,510.37
Retainage: $11,525.15 (10% on our amount before taxes)
Amount paid at checkout: $120,985.22 (Invoice total with taxes - 10% deduction before taxes)
 
Basically, this customer calculates their taxes on the total invoice and then subtracts the withholding. Whereas in Acumatica, as configured, the invoice taxes are calculated on the total without the holdback and then calculates the taxes on the holdback. It comes down to the same thing in the end, but it means that when cashing out it doesn't swing.

Is it possible to do this configuration in Acumatica?

@Laura02 @aaghaei I saw your post about retainage, would you have an idea?

Thanks for all ! =)

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Best answer by raphrf 10 April 2024, 23:42

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Raphael

4 replies

aaghaei
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Hi @raphrf two things to note.

  1. I don’t think you can and even I don’t recommend customization because there is lots of side effects from posting invoices to aging reports.
  2. Be mindful how your accounting team applies the payment. You have received the full tax amount from the client and by law you are obligated to remit to the tax authorities but the way Acumatica posts the invoice and the retainage and applies payments is prorated. 

I don’t think the client in question have proper accounting practice in place but of course you have to deal with the headaches 

Reza Aghaei CPA, M. Acc. & Acumatica Customization - If a member helped you, please *Like* their post. If a member provided an answer to your question, please mark it as *Best Answer*.
R
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Hi @aaghaei ,

I think we found a manual workaround, in the Proforma or in the AR invoice.

We need to do this

Do you think it’s a good way?

Raphael
aaghaei
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@raphrf This actually can work. can you please provide a screenshot of the Retainage tab when you make this change along with the invoice header? Your Retainage tab tax withholding should show zero and amount due should read $1,049.75

Reza Aghaei CPA, M. Acc. & Acumatica Customization - If a member helped you, please *Like* their post. If a member provided an answer to your question, please mark it as *Best Answer*.
aaghaei
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@raphrf  I was curious myself to see how it will play out. It works just fine and posts the JEs correctly as well. I didn’t proceed to Retainage release to see how it will work but it should work fine as well. This is screenshot of a $1,000.00 bill with 10% retainage and 5% tax JE created by the system. I learned something new today. Thank you.

 

Reza Aghaei CPA, M. Acc. & Acumatica Customization - If a member helped you, please *Like* their post. If a member provided an answer to your question, please mark it as *Best Answer*.

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