Retentions in WorkGuru can usually be handled much more efficiently using our built-in retentions workflow. This automates the retention workflow to the project line item level and requires no additional double handling in the accounting system.
However, you can manage the retention process in WorkGuru the same as Xero, as shown in Heather's video below. This requires more administration across both WorkGuru and Xero as the recommended method but may provide additional control required by your retentions requirements. The primary difference between the process outlined in Heather's video, is that WorkGuru will supply the invoices and credit notes to Xero instead of creating them directly in Xero.
An overview of this retention workflow is a scenario where the total invoice is $1000 with a retention claim is $200. Raise the invoice in WorkGuru for $1000 and client is going to pay $800. Due to this, we raise a credit note tagged with the new retention moneys account alternative GL to reconcile the missing $200. When the retentions are due you then raise an invoice for the claimed $200.
A step-by-step guide
Step 1: Create a Retention Monies Asset account in Xero
- In Xero, go to Accounting/Chart of Accounts and click "Add a new Account" in Xero for Retention Monies.
- Select Account Type as "Current Asset", Assign a specific GL Code and call it "Retention Monies"
- Tick the checkbox for show on dashboard watchlist.
- In WorkGuru, go to Accounting/Xero and sync data to Xero. Click Get Chart of Accounts
Step 2: Create a Retention product in WorkGuru
- Create a new product in WorkGuru. Ensure it is a non-stock product called Retention.
- Set the ALT GL to the Xero retention monies number created in step 1.
Step 3: Record a sale
- Create an invoice in WorkGuru
- Put in the full amount exclusive of GST
- Close off the sale
Step 4: Apply a partial payment to the sale
- Go back to the invoice in WorkGuru
- Send partial payment in Xero for payment.
- Sync partial payment with WorkGuru by going to Accounting/Xero and clicking "Get Payments".
Step 5: Record the retention monies and close off the sale
- In WorkGuru, raise a credit note
- Record a date, credit note number and job reference (optional)
- Change the account to the Retention Monies account (created in step 1)
- Change tax rate to GST on Income.
- Hit approve. This allows you to close the invoice and transfer the money to the Retention Monies account. You can check by going to Retention Monies account in the Chart of Account. You can click on the link and see the transactions in that account
Step 6: Create a new invoice for the retention monies
- Create a new invoice in WorkGuru to recognise the retention money.
- Add client details, date (usually a few months later when retention is paid)
- Add retention amount ensuring the tax is set to GST on Income. Add job# for reference if required.
- Send to Xero for payment
- Record receiving the payment in Xero