Understanding Retainage Rules

Using the Retainage Rules Table program (P5204), you set up rules for how the system calculates retainage. When you set up retainage rules, you first select the billing line types on which you want to calculate retainage. You can select to calculate retainage on cost, fee, or award fee billing line types, or a combination of these three types.

You also specify whether the retainage amounts are cumulative. If you specify that retainage amounts are cumulative, the system calculates retainage amounts using the prior associated invoice amounts and retained amounts, along with the current invoice amounts.

Finally, you specify the percent until which to calculate retainage (percent complete), the percentage to retain, and the source amounts that the system uses to determine the percent complete. You can select the schedule of values, awarded amounts, or the funded amounts as the source amount.

If you select only one billing line type on which to calculate retainage, the system calculates retainage until the cumulative invoice amounts for that billing line type exceed the percent complete of the corresponding source amounts specified in the retainage rule. The system then applies the retainage amount that it calculates to that billing line type. For example, assume you set up a retainage rule, R01, as follows:

• Billing line types to include: cost amounts.

• Percent complete source: funded amounts.

• Percent to retain: 10.

• Percent complete: 85.

Using retainage rule R01, the system calculates 10 percent retainage until the cumulative invoice amounts for cost exceed 85 percent of the cost-funded amounts on the contract. The system applies the retainage that it calculates to the cost billing lines on the invoice.

If you select more than one billing line type, the system calculates retainage until the cumulative invoice amounts for all selected billing line types exceed the percent complete of the corresponding source amounts specified in the retainage rule. In other words, the system does not calculate retainage when you exceed the percent complete of each billing line type. For example, assume you set up a different retainage rule, R02, as follows:

• Billing line types to include: cost and fee amounts.

• Percent complete source: funded amounts.

• Percent to retain: 10.

• Percent complete: 85.

Using retainage rule R02, the system calculates 10 percent retainage until the total of the cumulative invoice amounts for costs and fees exceeds 85 percent of the total of the funded cost and funded fee amounts on the contract. In this example, the system first calculates the total retainage amount and then allocates a percentage of the total to the cost and fee billing lines on the invoice. The system allocates the retainage amount based on what percentage the cost and fee amounts are of the total amount on which retainage is calculated for the current invoice.

See Example: Setting Up and Calculating Retainage for an Advanced Contract Billing Contract.

See also:

• "Defining Retainage Rules For Contracts" in the JD Edwards EnterpriseOne Applications Contract and Service Billing Implementation Guide.

• "Understanding Retainage Calculations for JD Edwards EnterpriseOne Contract Billing" in the JD Edwards EnterpriseOne Applications Contract and Service Billing Implementation Guide.