Retention release using AFP

When a subcontractor requests a payment using an Application for Payment, the request can also include a part of the retention amount in the Retention Requested Amount field. The assessor can determine if this request must be approved and how much of the requested amount must be approved. The assessor can specify the approved amount in the Retention Approved Amount field and this amount must not exceed:

  • The requested retention amount.
  • The amount that has been deducted with previous AFPs.
Note: All retention amounts are maintained and displayed in the currency specified for the Services Procurement Order. The requested currency rates of the AFP are used for the requested amount. For the approved amount, the assessed currency rates of the AFP are used.
This data related to retention can be maintained for an AFP:
  • Requested Amount
  • Description
  • Approved Amount
  • Discount %
  • Discount Amount
  • Net Approved Amount

You can also view the retention amounts related to the previous periods.

The applicable tax percentage and amount must be specified for the retention release amount. For each retention, you can:
  • Specify the tax percentage applicable for labor and non-labor content.
  • You can split the retention amount and define different taxation per amount.
Note: The tax specified for the related Subcontracting Procurement Order lines are not applicable for retention releases.

When validating the AFP, a check is performed to ensure that the tax data is specified. If not specified, the validation results in failure and the error related data are updated in the Application for Payment Validation Errors (tdpur6522m000) session. You can define what percentage of the retention approved amount is for the tax eligible labor.

When a subcontractor requests for an early release of the retention amount, you can apply Discount Percentage or a Discount Amount on the retention release amount. This discount is applied to the (gross) Approved Amount of the retention release. The Net Approved Amount is released to Certificate of Payment (CFP), but the (gross) Approved Amount is used to reduce the retention balance for the Subcontracting Procurement Order and the Invoice-from BP. The discount amount is booked to the corporate account, and this increases the corporate profit.

For a retention release, you can also specify the text for payless notice, describing why the amount paid is less than the requested amount. This text is printed in the payless notice report of the AFP.

Note: A payless notice must always be printed when the existing the AFP activity, Print Payless Notice, is applicable, even when less is paid only for the retention and not for the AFP.

When the AFP is approved, the retention release is also automatically approved. When the AFP is released, the retention release is included in the AFP release to CFP. If the retention request via the AFP is declined, the retention approved amount is set to zero (0). During approval of the AFP, the retention amount is not updated to Finance, and the status of the retention release is updated to Declined.