Advance & Retension for a vendor

Question

Dear Friends,
My Issue:
For a vendor my payment should be:
--> 10% Advance of the total Contract should be given to the Vendor
--> when ever vendor invoices (partial invoices) we should cut 10%(on advance given before) and 10% Retension and pay him 80% of the value in invoice
--> at the end of the final work we should pay to vendor the 10% retension which we are deducting with all the invoices
Hope this is clear
Reg
Rajesh

Answer 1

Dear Rajesh
There are two scenario's for your problem. if the invoice comes from the Purchasing order or directly from the FI vendor.
If it is from the Purchase order, pl follow the following sequence.
1) pay the advance as usual which is the same for the both the cases F-48
2) raise the invoice for total amount.Say Ex. invoice amount, 10,000, (retn amount,500, and recovery of the advance, 1000 and any penalty etc, 500) 3) using clearing to some of the balance sheet accounts for retention amount and recovery of the advance amount paid and if any penalty etc through P&L accounts through F-51for the balances of 500, 1000 etc.,)
4) Now only you are able to see the open item for the particular vendor i.e. 10000-500-1000= 9500
5) pay for the open item  9500 then the issue was solved.
When you want to repay the retention amount, such time debit that amount and credit the bank account.
I hope it will suffice you requirement.
Regards
madhav