Dear Team,
I want some help on retention money.
I have got a new case and I do not know how to do the retention money accounting as per erpnext.
I am trying to explain my example in short, someone pls help if possible.
I raised a bill on my customer for 1000 rs, customer paid 900 rs, balance 100 rs is with him as retention money and he will release on successful completion of the contract.
However, retention money was not paid by the client and now that 100 rs has become bad debts for me.
So i passed a sales invoice for 900 rs.
Now i want to know the accounting treatment for the balance 100 rs as retention money which has become bad debts now.
My confusion is should I create separate general ledgers for retention money and pass entries through that account or follow some other route.
Please suggest me some solution as per erpnext.
Thank you .
When you say “raised a bill”, was this a Sales Invoice?
Check out Bad Debts instructions.
@volkswagner ,
Yes, I raised a sales invoice for 900 rs.
Now i want to know the accounting treatment for the retention money as per erpnext.
Please suggest an answer if you have any . Thank you .
I guess I’m not following. What docType is the Bill for 1,000 rs?
The invoice should’ve been for 1000 not 900, then use the bad depts link provided for the 100 rs difference.
If the invoice is only for 900, there is no bad dept to recover, since sales invoice amount is = receipt amount.
Hello @volkswagner ,
My doubt is how should the retention money be accounted in the books?
I understand the treatment for bad debts.
If money is not recovered, then it has to go under the bad debts only, that I understand, but we should show retention account as well in our books right?
So I want to know how retention money can be shown in the books.
I hope, I am clear now. Pls help if you know any answer.
Thank you .
I think the definition of “Retention Money” is in question. It seems, retention money is a receivable account and should remain as such. If you booked $1,000 in sales, received $900 then $100 is still receivable. I wouldn’t make this a unique account. I would leave it as receivable (debtors). If you’d like to mark it as bad debt, then it’s easy to do as unreceived sales, but it must be marked as sales in the first place.
How you handle “Retention” depends on how you book the original amount. Since you only booked a sale for $900, there is no retention or bad debt.
There are reports for accounts receivable which will help you identify which customers still owe a balance (full amount or only retention amount).