About Applying Maximum Retention Amounts to Contracts
When creating contracts in the system, you can apply a maximum retention amount.
Once the system reaches the retention amount, it will no longer continue withholding retainage for a specified contract.
To set the maximum retention amount for a contract, you will use the Set WC Maximum Retention section in either JC Contracts or PM Contracts. Using these forms, you can set an amount based on a percentage of the contract total or you can specify a flat amount. Once you have set the amount, you can then determine how the system distributes the retention amount among the contract items once the maximum retention amount is reached. When you create invoices for the contract (either manually using JB Progress Billing or automatically using JB Bill Initialization), the system calculates and distributes retention amounts based on the distribution option that you select.
There are two options for retention amount distribution:
-
Composite Percentage - With this option, the system takes the final retention amount and calculates an overall percentage rate which it applies to all contract items equally.
-
Item Percentage from Invoice - With this option, the system distributes the final retention amount based on the work completed retainage percent value for each line. The system continues to distribute in this manner until the retention amount is depleted. The system places any leftover amount on one final item on the contract, resulting in a calculated retention percentage value for that item only. The system sets the work completed retainage percent to zero for all remaining items on the contract.
Composite Percentage
If you have set the maximum retention amount for a contract at $10,000, and you have already created invoices with retention amounts totaling $8,000, you will only have $2,000 left before you reach the maximum retention setting. If you invoice $3,000 retention for two more items (as seen in Table 1), the system will calculate a composite retention percentage and apply it to each item.
The system uses this calculation to determine the composite retention percentage: Maximum retention remaining ($2,000) / New Invoice Items Total ($30,000) = Composite Retention Percentage (.066666). The system then updates the work completed retention percentage and work completed retention amounts based on the composite retention percentage (as seen in Table 2).
|
This Invoice |
Invoice Amount |
Retention % |
Retention Amount |
|---|---|---|---|
|
Item #1 |
$10,000 |
10% |
$1,000 |
|
Item #2 |
$20,000 |
10% |
$2,000 |
|
This Invoice |
Invoice Amount |
Retention % |
Retention Amount |
|---|---|---|---|
|
Item #1 |
$10,000 |
6.67% |
$668 |
|
Item #2 |
$20,000 |
6.66% |
$1,332 |
Item Percentage from Invoice
-
Tables 3 and 4 display how the system would distribute the retention amount for a contract with a maximum retention of $400. Table 3 shows the retention amounts prior to distribution, while Table 4 displays the retention amounts after the distribution.
Table 3. Retention Amounts Prior to Distribution This Invoice
Invoice Amount
Retention %
Retention Amount
Item #1
$1,000
10.00%
$100
Item #2
$2,000
10.00%
$200
Item #3
$3,000
10.00%
$300
Item #4
$3,000
10.00%
$300
Table 4. Retention Amounts After Distribution This Invoice
Invoice Amount
Retention %
Retention Amount
Item #1
$1,000
10.00%
$100
Item #2
$2,000
10.00%
$200
Item #3
$3,000
3.33%
$100
Item #4
$3,000
0.00%
$0
If you exceed the maximum retention amount, and you are initializing contracts, the system automatically distributes the retention amount based on the distribution setting for the contract. If you are adding an individual contract to the worksheet, and you exceed the maximum retention amount, the system will display a warning and you can decide whether or not to have the system automatically set the maximum retention amounts.
