Requirement 1: Create a QuickBooks Item to use for Retainage
Typically, users should have an account in QuickBooks to hold retainage amounts separately for receivables and payables. For receivables, the account type should be Other Current Assets, while for payable retainage, the type would be Other Current Liabilities.
Create an account to hold retainage receivable.
In QuickBooks, add a new account
Select Other Current Asset as the account type, select Retainage as the Detail Type.
Type in the desired account name.
Save the account
Create an account to hold retainage payable
In QuickBooks, add a new account
Select “Other Current Liability” as the account type
Enter the desired account name
Save
Create an Item to use as a retainage line item.
Open the Items & Services module
Create a new Item
Choose “Service” as the item type. Enter the desired name and then check the “This service is used in assemblies or is performed by a subcontractor or partner”
Under the PURCHASE INFORMATION, select the retainage payable account you created as the Expense Account. Under the SALES INFORMATION, select the retainage receivable account you created as the Income Account.
Save (click OK)
Requirement 2: Setup the Retainage QuickBooks Item Code in RedTeam Go
Go to the QuickBooks Desktop Integration setting page (Accounting > QuickBooks Desktop Integration > Settings)
Request a refresh of the item list
Make sure the Web Connector is running.
Once the web connector has finished processing, refresh the settings screen.
Select the QuickBooks retainage item you want to use for syncing retainage data for Owner Invoices
Select the QuickBooks retainage item you want to use for syncing retainage data for Subcontractor Bills
Note: If you don’t want to sync retainage data, leave the QuickBooks Item Code blank
Save
How do the retainage accounts handle the bills as they are pushed to QuickBooks?
Once the Retainage accounts are connected through the integration, subcontractor invoices will flow over to QuickBooks showing the full amount billed and a negative retainage amount for all progress bills. For the first subcontractor bill for a given vendor and project, a second "retainage bill" will also be created that will include the retained amount(s) as positive line items to be paid. The due date for this separate retainage bill will be automatically set to the project end date, but may be modified as desired. As subsequent subcontractor bills for the same vendor and project are sent to QuickBooks, additional retained amounts will be added to the existing retainage bill as new line items.
Should partial retainage be released on any subcontractor bill prior to the end of the project, the released amount will show as a negative line item on the retainage bill in order to correctly reflect the remaining retainage to be paid at the end of the project. Upon reaching the end of a project, any retainage-only bills created in RedTeam Go will not sync to QuickBooks at all, and the existing retainage bill in QuickBooks can be paid as appropriate.
Ex. Bill 1:
Total bill amount: $5000
Retainage: $250
What is sent to QB:
Progress Bill: "25-042-002 Pay App 1" = $4750 (including a -$250 line item)
Retainage Bill: "25-042-002 Retainage" = $250 (including two $125 line items for each applicable cost code)
Bill 2:
Total bill amount: $3000
Retainage: $150
What is sent to QB:
Progress Bill: 25-042-003 Pay App 2" = $2850 (including a -$150 line item)
Line Item for existing bill "25-042-002 Retainage" = $150, bringing bill total to $400
Bill 3 (Retainage-only bill):
Total bill amount: $400
Retainage: $0
What is sent to QB:
Nothing. Existing retainage bill in QB can be paid as appropriate.
Note: If retainage accounts are not set up in QuickBooks and mapped to Owner and Subcontractor bill types through the integration settings, the amount that pushes to QuickBooks to pay the sub is the net Bill Amount - Retainage held = payment due.
Using the same example as above it will looks as follows:
Bill 1:
Total bill amount: $5000
Retainage: $250
What is sent to QB:
Payable amount: $4750
Bill 2:
Item 1 bill amount: $3000
Retainage: $150
What is sent to QB:
Payable amount: $2850
Bill 3 (Retainage only bill):
Total bill amount: $400
Retainage: $0
What is sent to QB:
Total bill amount: $400