About retention invoices

You can create retention invoices when you need to allow your client to withhold payment on an agreed percentage of the original quote until the work is completed to their satisfaction.

allows you to produce retention invoices by using a combination of progress invoices and a final invoice.

Producing retention invoices

To produce a retention invoice, you need to follow these high-level steps:

1. Produce a quote for the planned work. Once this quote has been accepted, it automatically becomes a job in .
2. Produce progress invoices. As work progresses on the job, you need to produce a series of progress invoices at agreed stages of the work. For example, you might produce a progress invoice for 50% of the quoted value once half the work is complete, then another progress invoice when all work is complete. The last progress invoice would be for the balance of the quote, but would exclude the withheld amount, which may be 10% of the invoiced amount.
   • Details...

     Repeat the steps below, as required, to produce one or more progress invoices during the course of the work.

     To produce and send a progress invoice as work progresses:

     1. If required, navigate to the job you wish to invoice:
        1. In the Jobs menu, select Jobs.
        2. On the Job Manager screen, drill down on the job number.
     2. Click Job Actions > + New Progress Invoice.
     3. Select then enter the percentage of the quoted value you want to bill for in this invoice.

        For example:

     4. In the Description field, edit/accept the Default percentage progress description.

        For example: First progress payment: 20% of quoted amount.

        Then click Save. The New Invoice - Draft screen is displayed.

     5. Click Save & Approve. Approving the invoice will automatically - and immediately - create a copy of the sales invoice in your Xero account where it can be reconciled against the incoming payment from the client.
     6. Click Email and (if prompted) select a print template to use for formatting the invoice. The Send Email dialog is displayed.
     7. Complete the email details and click Send Email.

     Produce the last progress invoice when work is complete. The last progress invoice bills the client for any remaining unbilled amounts, excluding the retention amount, which will be billed in the final invoice. For example: Original quoted value of job: 5000. Previous progress payments: 3750. Unbilled amount: 5000 - 3750 = 1250. Last progress invoice amount: 1250 - 500 retention amount = 750.

     To set up the retention amount as a cost item:

     1. Go to the Costs tab of the job.
     2. Click + Add A Cost.
     3. In the Cost Name field enter: Retentions - 10% of the quoted value (or similar).

        Click the "Create" option at the bottom of the Cost Name drop-down list to create a new cost item, if required.

     4. In the Unit Cost field enter: 0 (zero).
     5. In the Unit Price field enter: 500 (10% of the quoted value in this example).
     6. In the Quantity field enter: -1 (negative 1).
     7. (optionally) Provide more information in the Cost Note field. For example: Retentions withheld as per Contract # WCC-166675-12 until 20 Feb 2024.
     8. Save your changes. The retention amount is included as a negative cost on the job.

     To create and send the last progress invoice:

     1. Go to the Financials tab of the job.
     2. Select Job Actions > + New Progress Invoice.
     3. Select Quoted/Estimated Time and Costs, then Save. In the Costs section of the invoice, the retentions information is highlighted with pale orange shading, as it is a cost that was not included in the original quote.
     4. Make sure that the Invoice checkbox is selected, otherwise the billable retention amount is zero.
     5. Click Save & Approve.
     6. Click Email and (if prompted) select a print template to use for formatting the invoice. The Send Email dialog is displayed.
     7. Complete the email details and click Send Email.
3. Produce the final invoice. This invoice is for the withheld amount and completes the invoicing cycle.
   • Details...

     To set up the retention amount as a cost item:

     1. Go to the Costs tab of the job.
     2. Click + Add A Cost.
     3. In the Cost Name field enter: Retentions claimed - 10% of the quoted value (or similar).
     4. In the Unit Cost field enter: 0 (zero).
     5. In the Unit Price field enter: 500 (10% of the quoted value in this example).
     6. In the Quantity field enter: 1 (positive 1).
     7. (optionally) Enter more information in the Cost Note field. For example: Retentions claimed as per Contract # WCC-166675-12 until 20 Feb 2024.
     8. Save your changes.

     To create and send the final invoice:

     1. Go to the Financials tab of the job.
     2. Select Job Actions > + New Final Invoice.
     3. Select Quoted/Estimated Time and Costs, then Save. In the Costs section of the invoice, the retentions information is highlighted with pale orange shading, as it is a cost that was not included in the original quote.
     4. Make sure that the Invoice checkbox is selected, otherwise the billable retention amount is zero.
     5. Click Save & Approve. Approving the invoice will automatically - and immediately - create a copy of the sales invoice in your Xero account where it can be reconciled against the incoming payment from the client.
     6. Click Email and then (if prompted) select the required print template to use for formatting the invoice. The Send Email dialog is displayed.
     7. Complete the email details and click Send Email.