Proper retainage accounting is essential for accurate financial statements. RIVET syncs retainage to QuickBooks Online and Xero with proper journal entries that follow construction accounting best practices.
Pro Feature Required
Retainage Accounts
To properly track retainage, you need specific accounts in your chart of accounts:
Retainage Receivable (Asset)
An asset account that holds the value of retainage you've earned but haven't received. This is typically classified as a current asset (if due within 12 months) or long-term asset.
Account Setup
| Field | Value |
|---|---|
| Account Name | Retainage Receivable |
| Account Type | Other Current Assets |
| Detail Type | Other Current Assets |
Multiple Projects
Journal Entries
RIVET creates the following journal entries when syncing to your accounting system:
When Billing (Pay App Created)
When you create a pay application with retainage:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | $90,000 | - |
| Retainage Receivable | $10,000 | - |
| Revenue | - | $100,000 |
This records the full revenue earned ($100,000) while separating the amounts due now ($90,000) from amounts due later ($10,000 retainage).
When Retainage is Released
When you bill for retainage release:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | $10,000 | - |
| Retainage Receivable | - | $10,000 |
This moves the retainage from the holding account to regular A/R, where it will be collected.
When Payment is Received
Normal payment recording applies:
| Account | Debit | Credit |
|---|---|---|
| Bank Account | $10,000 | - |
| Accounts Receivable | - | $10,000 |
QuickBooks Online Sync
When syncing to QuickBooks, RIVET handles retainage as follows:
Initial Setup
- Connect QuickBooks in RIVET settings
- Map your Retainage Receivable account
- Map your Revenue account(s)
- Configure job/class tracking (optional)
Sync Behavior
- Invoices - Created for the net amount (excluding retainage)
- Journal Entries - Created to record retainage portion
- Classes - Applied for project-level tracking (if configured)
Automatic Entries
Xero Sync
Xero integration follows a similar pattern:
Account Mapping
- Retainage Receivable account (Asset type)
- Revenue accounts for income
- Tracking Categories for project tracking
Transaction Types
- Invoices - For the collectible portion
- Manual Journals - For retainage entries
Financial Reporting
Proper retainage accounting provides accurate financial statements:
Balance Sheet
- Retainage Receivable shows as a current asset
- Accounts Receivable shows collectible amounts
Income Statement
- Revenue includes full earned amounts (including retainage)
Aging Reports
Retainage receivable should be aged separately from regular A/R since the collection timeline is different (tied to project milestones, not invoice terms).
Separate Reporting
Project-Level Tracking
RIVET supports tracking retainage by project in your accounting system:
QuickBooks Classes
If you use Classes for job costing, RIVET applies the project class to all retainage entries.
Xero Tracking Categories
Tracking Categories are applied to retainage journal entries for project-level reporting.
Reconciliation
Periodically reconcile your RIVET retainage totals with your accounting:
- Run the Retainage Summary report in RIVET
- Compare to your Retainage Receivable account balance
- Investigate and resolve any differences
Common Differences
- Unsync'd pay applications
- Manual journal entries in accounting
- Rounding differences
- Timing differences at month-end
Best Practices
Monthly Reconciliation
Clear Naming
Age Separately
Need Help?
If you have questions about retainage accounting or need assistance with your QuickBooks or Xero integration, contact our support team at support@slpwlk.io.