As with payables invoices, your clients may be required to hold back a percentage of the invoices for their projects. This mitigates the risk to any one subcontractor on a project. If a contractor suffers financial problems, the losses are spread over the entire job, rather than just the subcontractors downstream from him.
Holdback amounts are recorded on each invoice item.
If the job you’re working on completes successfully, holdback amounts will be released. To create invoices to recover the withheld amounts, navigate to [b] Receivables, then [h] Release Holdback.
Abio is going to list all invoices with holdback amounts, starting with the client and invoice you select.
Clicking on the ‘Next >>’ button displays the list.
Because this is demonstration data, there’s only one item with a holdback amount. Click on the single ‘>’ to select the currently highlighted record. The ‘>>’ button selects all records. Clicking on the ‘Process’ button creates invoices for the holdback amount.
A status report shows you the invoices that were created.
The first invoice reverses the holdback amount, and the second invoice records it as a purchase. Note that GST isn’t charged when the holdback is first recorded, but it is due when the holdback is released.
The invoice will balance out when your client pays you the withheld amounts.