How You Create Purchase Orders with Retainage Terms

Retainage is the amount withheld from payment to ensure that the contractor finishes work as agreed. Your organization will release the retainage amount only after verifying that the contractor has fulfilled all contractual obligations.

You can create purchase orders with retainage terms by specifying retainage rates and maximum retainage amounts on the purchase order lines. If needed, you can specify different retainage rates by schedule for the same purchase order line. Invoices matched to such purchase orders will automatically withhold an amount as per the specified rate. The maximum retainage amount sets the limit up to which you can withhold retainage from matched invoices.

Retainage Rate: It's the percentage of the invoice amount that will be withheld before releasing payments to the contractor. This attribute appears on the PO Line if the document style enables the use of the retainage.

Maximum Retainage Amount: It's the maximum amount of retainage that can be withheld on a purchase order line. This attribute appears on the PO line if the document style enables the use of retainage. Every time retainage is withheld on an invoice, the application checks that the total retained amount from invoices matched to the PO line doesn't exceed this value.

Using the Create Purchase Orders with Retainage Terms feature, you can perform these tasks:

Create purchase orders with negotiated retainage terms from awarded bids in Oracle Sourcing Cloud.
Communicate purchase orders with retainage terms via email or electronic messaging.
Configure Oracle Analytics Publisher templates to include the retainage terms.
Monitor retainage balances on your purchase orders from the Purchase Order Life cycle and Schedule Life cycle pages.
Analyze retainage-enabled purchase orders using the OTBI Purchasing Real time subject area.
Create retainage-related contract terms for purchase orders using these contract variables:
- Retainage Rate system variable: It represents the common retainage rate across purchase orders schedules.
- Multiple Retainage Rates system variable: It indicates that multiple values exist for retainage rate across purchase order schedules.
- Maximum Retainage Amount system variable: It represents the maximum retainage amount for single-line purchase orders.