Set up vendor retention

Applies To: Project Operations for resource/non-stocked based scenarios

This article provides information about how to set up vendor retention.

Set up a vendor retention account in General ledger

1. In Dynamics 365 Finance, go to General ledger > Posting setup > Accounts for automatic transactions.
2. Add a new line.
3. In the Posting type field, select Vendor retention.
4. Select the main account for the vendor retention posting.

Create vendor retention terms

Use the Vendor retention terms page to set up and maintain retention terms for vendor payments. Enter the percentage of the vendor payment to retain and the percentage of the previously retained amounts to release. Amounts are automatically retained on vendor invoices until the contract reaches the specified state of completion. After retention terms are set up for a vendor, you can apply them to any project on which the vendor works.

1. In Finance, go to Project management and accounting > Setup > Retention > Vendor payment retention terms.
2. Select New to add a new vendor retention term. The value in the Rule ID field for the new term is automatically entered.
3. In the Description field, enter a descriptive name for the new term.
4. On the Terms tab, select Add line to enter a vendor retention term.
5. In the Percentage of units delivered field, enter a percentage of completion for the rule. Amounts are automatically retained on vendor invoices until the project stage of completion is equal to the percentage that you enter. For example, if you enter 50.00, amounts are retained until the project is 50 percent completed.
6. In the Percentage to retain field, enter the percentage of a vendor invoice amount to retain. For example, if you enter 10.00 in this field, 10 percent of the amount on vendor invoices is retained until the project reaches the percentage of completion that you select in the Percentage of units delivered field.
7. In the Percentage to release field, enter the percentage of any previously retained amounts to release at the selected level of project completion.

Note

If you have more than one milestone for different levels of project completion, enter a separate vendor retention term line for every retention rule. Each line can specify a different percentage to retain and a different percentage to release for each designated level of project completion.

Set up a vendor agreement for the project

Set up the vendor retention terms that apply to the project. The vendor retention terms are also displayed on purchase orders that you create for the vendor.

1. In Finance, go to Project management and accounting > Projects > All projects.
2. Select a project, and on the Action Pane, select Project group > Vendor agreements.
3. On the Vendor agreements page, add a new line.
4. In the Account code field, select one of the following options:
   • Table: The vendor retention terms apply to a single vendor.
   • Group: The vendor retention terms apply to all vendors in a vendor group.
   • All: The vendor retention terms apply to all vendors.
5. In the Vendor/Vendor group field, select the vendor or vendor group to which the vendor retention terms apply. If you selected All in the previous step, this field is unavailable.
6. In the Vendor retention terms field, select the rule ID for the retention terms to apply to this vendor.