Retention Money

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Experienced Cover User
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Retention Money

Hi there,

 

I was wondering how best to record a customer invoice showing retention money to be held.  I was thinking the transaction would be:

 

Raise a sales invoice to the customer:

Dr "Trade Debtors Acc" for the full amount

Cr "Income Acc" for the full amount (MYOB will automatically cr the GST account)

Dr "Retention Monies Acc " (currently set up as a liability account) to appear as a negative on the invoice and reducing the amount the client owes.


When the retention money becomes due for payment, I would raise another invoice to the customer as follows:

Dr "Trade Debtors Acc" for the full amount of retention owing

Cr "Retention Monies"

 

The "Retention Monies Acc" coded as "GST" so that when payment is received the GST will become payable (we report on a cash basis for GST purposes.

 

Is this the best method or is there another way?

 

Thanks,

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MYOB Staff Post
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MYOB Staff Post
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Accepted Solution Solved

Re: Retention Money

Hello @starmeadow,

 

When it comes to setting up the retention invoice I would create a separate asset account for retentions held rather than use the Trade Debtors account.  Also, posting directly to the trade debtors account is likely to create issues with your reporting, namely the receivables reports - not to mention having a separate account will provide better tracking as well.

 

There is an MYOB support note goes over how to set up the retention and receive payments against it here: Setting up and handling retentions.  

 

I hope that this is a suitable solution for you, please don't hesitate to post again if you require any further assistance.


Regards,
Matyas


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Experienced Cover User
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Re: Retention Money

Brilliant, thank you. I was confused because the Chart of Accounts had only the liability account set up but no asset. This all makes sense now -
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MYOB Staff Post
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MYOB Staff Post
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Re: Retention Money

You are very welcome @starmeadow,

 

And thank you for the update, I'm glad that I could help you out.


Regards,
Matyas


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