With Oracle's Complex Work feature, contract administrator can negotiate retainage terms with the contractor and capture these as part of the contract. These terms include Retainage Rate and Maximum Retainage Amount.
The Retainage Rate determines the percentage of the amount requested that will be withheld before releasing payments to the contractor. This attribute appears on the PO Line if the Document Styles enables the use of Retainage. The Retainage Rate specified on the PO Line is applied to all Standard Invoices billed to the Pay Items of the respective Line. Based on the Retainage Rate, a certain percentage of the Standard Invoice Amount is with-held as a Retained Amount.
The Maximum Retainage Amount defines maximum amount of Retainage that can be withheld on a Contract Line. The Maximum Retainage Amount 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 does not exceed this value.
Set Up Steps for Complex Purchase Orders and Retainage
Following three mandatory setups steps are required if the complex purchase orders and retainage feature will be used.
1. Create a new document style in Oracle Purchasing for handling Complex PO.
Navigation: Setup > Purchasing > Document Styles > Create
Define whether the complex PO can include advances, retainage, and progress payments
2. Create a retainage account in Financials Options setup.
Navigation: System Administrator > System Profile Options
Set the value for POR: Amount Based Services Line Type profile option to ‘Fixed Price Services’
3. Create a retainage account in Financials Options setup.
Navigation: Setup > Options > Financials Options
Enter the retainage account to use during accounting
1. Create a Purchase Order using Buyer Workbench. Select the Document style ‘Complex PO’ just created earlier
Navigation: Buyer Work Center > Orders
2. Enter the PO Header and Line details
1. Once supplier sends the invoice after the first milestone is met, raise a PO matched invoice