Billing Retention Using Draw Request

The following example details the Draw Request process when billing retention to the customer:

Example: $100,000 contract

10% retention 

Time Line 12/31/15:

Over some months, work has progressed on the project and Draw Requests have been issued monthly, with 10% retainage. At 12/31/15, $90,000 has been completed ($81,000 current, plus $9,000 retainage)

Debit

Credit

A/R Trade

81,000

A/R Retainage

9,000 

Contract Revenue

90,000

Time Line 01/31/16:

An additional $10,000 has been completed and 1/2 of the retainage is now due as well.

On the Draw Request Billing Entry screen, enter additional percent complete information as usual to generate an additional $10,000 complete.

On the Summary Billing Entry, override the 10% retainage figure with 5%. This will cause the current billed to become 95% of the total ($81,000 + $14,000 = $95,000).

Debit

Credit

A/R Trade

14,000

A/R Retainage

4,000

Contract Revenue

10,000

Time Line 02/28/16:

The final $5,000 retainage is billed using an additional Draw Request.

On the Draw Request Billing Entry screen, the heading information is recorded but no additional percent complete is done since the job was 100% complete last month.

On the Summary Billing Entry, override the retainage figure with 0%. This will cause the current billed to become 100% of the total ($81,000 + $14,000 + $5,000 = $100,000).

Debit

Credit

A/R Trade

5,000

A/R Retainage

5,000

Contract Revenue