About Calculating and Distributing Claim Retention
You can calculate and distribute retainage/retention/holdback (depending on country) for a subcontract claim in SL Subcontract Claims.
When you enter items on a subcontract claim, retention is automatically calculated for each item based on the Work Completed Retention % specified for the item (in SL Subcontract Entry) and the Approve Amount specified for each item (on the Items tab of the SL Subcontract Claims form).
The diagram below outlines how the system selects a default retainage percentage when the subcontract item is created.
The system then totals the retention on the subcontract items and applies the maximum retention (if a maximum retention is defined for the subcontract). For an overview on maximum retention, see About Subcontract Maximum Retention Amounts.
If item retention exceeds the total retainage allowed for the subcontract, the system displays a "Max Retainage limit has been exceeded" warning (in red) next to the Retainage Remaining field in the Subcontract Details section at the top of the form. However, you can still save the claim.
Distribute Item Retention
The Distribute Item Retention button in the Subcontract Details section allows you to recalculate and distribute item retention.
You can use this option any time; however, the most common uses for this option are:
- to reset manually entered retention on the claim. For example if you manually entered retention on the claim, but would like the retention to be calculated using the work complete retention percentage entered on each subcontract item included in the claim, use this option to reset the manually entered retention and restore the default values.
- to reset retention for subcontract items when item retention exceeds the total retainage allowed for the subcontract (as defined by the maximum retention set up on the subcontract in SL Subcontract Entry, Maximum Retention tab).
When selected, the system calculates and distributes the retention on the claim based on the work complete retention percentage entered on each subcontract item included on the claim (this is true even if the percent/amount of retention to distribute is zero). Any manual retention amounts you entered are reset.
If the subcontract's maximum retention percent or amount is set to 0.00, selecting this button sets the retention amount to 0.00 for each subcontract item on the claim.
What happens when you change the retention amount?
If you change the approved retention on the claim, the system updates the approved retention on the subcontract items included on the claim (SL Subcontract Claims, Items tab).
If you reduce the approved retention on the claim, the retention on the subcontract item with the highest item number is reduced. For example:
| Before | After | ||
|---|---|---|---|
| Approved retention on claim = $20,000 | Approved retention on claim = $15,000 | ||
| Item #1 | $2,500 | Item #1 | $2,500 |
| Item #2 | $7,500 | Item #2 | $7,500 |
| Item #3 | $10,000 | Item #3 | $5,000 |
If the retention on the highest subcontract item is not large enough to cover the entire reduction, the retention on the next highest subcontract item is reduced.
The example below illustrates what would happen if you changed the approved retention on the claim from $20,000 to $5,000.
| Before | After | ||
|---|---|---|---|
| Approved retention on claim = $20,000 | Approved retention on claim = $5,000 | ||
| Item #1 | $2,500 | Item #1 | $2,500 |
| Item #2 | $7,500 | Item #2 | $2,500 |
| Item #3 | $10,000 | Item #3 | $0 |
If you increase the approved retention on the claim, the retention on the first subcontract item is increased.
For example:
| Before | After | ||||
|---|---|---|---|---|---|
| Approved retention on claim = $20,000 | Approved retention on claim = $30,000 | ||||
| Retention | Approved Amount | Retention | Approved Amount | ||
| Item #1 | $2,500 | $50,000 | Item #1 | $12,500 | $50,000 |
| Item #2 | $7,500 | $150,000 | Item #2 | $7,500 | $150,000 |
| Item #3 | $10,000 | $200,000 | Item #3 | $10,000 | $200,000 |
If the increase is greater than the approved amount on the first subcontract item, the retention on the next subcontract item will be increased, and so on. The approved amount on the subcontract item is the approved amount on the current claim, not the claim to date approved amount.
If you increase the approved amount on a claim and it exceeds the total retainage allowed for the subcontract (as defined by the maximum retention set up on the subcontract in SL Subcontract Entry, Maximum Retention tab), the system displays a warning. You can still save the claim, but "Max Retainage limit has been exceeded" will display next to the Retainage Remaining field in the Subcontract Details section at the top of the form.
For more information about maximum retention, see About Subcontract Maximum Retention Amounts.
