In WG the retention process is the same as Xero as shown in the video below. The only difference is WG will supply the invoice and credit note to Xero instead of creating them directly in Xero.
For example a scenario is a total invoice is $1000 and the retention is $200 then you would raise the invoice in WG for $1000 and client is going to pay $800. Then 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 $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 WG, go to Accounting/Xero and sync data to Xero. Click Get Chart of Accounts
Step 2: Create a Retention product in WG
- Create a new product in WG. 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 WG
- Send partial payment in Xero for payment.
- Sync partial payment with WG by going to Accounting/Xero and clicking "Get Payments".
Step 5: Record the retention monies and close off the sale
- In WG, 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 WG to recognise the retention money.
- Add client details, date (usually a few months later when retention is paid)
- Amount is inclusive of GST and there is GST on Income. Add job#
- Send to Xero for payment
- Record receiving the payment in Xero