Creating Purchase Orders with Retention

Retention is a part of an invoice amount that is retained until a defined due date to ensure the delivery of materials or the performance of services. If a company does not want to pay the total amount of the purchase orders immediately, purchasers can plan a security retention. It is taken into account when the invoice is posted, deducted from the invoice amount, and paid at a later time. The retention amount is released to the supplier when certain expectations are met or on a specified due date that has been agreed upon. For instance, the end of the warranty period. Retention is done to mitigate the risk to the purchaser.

You can create purchase orders with retentions using the Create Purchase Order - Advanced app.

In the Header section, on the Payment Processing tab, you select the Applicable (Header Level) for Retention and enter the Retention Percent. After entering the details of the product/material, you can see the retention on the Invoice tab of the items. It is possible to use retention only on the item level for a specific item rather than for the whole (header level) purchase order.

You can set some default values for your user using the Personal Settings tab which then be set as default values for the newly created purchase orders. The set values are used only for this app. In that case, you maintain the retention on the purchase order items instead of the header of the purchase order.

You can create the supplier invoice for purchase orders with retention using the Create Supplier Invoice app.

When you enter the Purchase Order in the invoice, a message is displayed in the application log informing you that the item is relevant for retention. In addition, four fields that are relevant for retention are ready for input in the invoice item (Retention amount in document currency, Retention percentage, Due Date, Tax Reduction for Retention)

You can set the configuration to define control parameters, tax handling, and default due date using the configuration item Incoming Invoice.