SECTIONSBilling Holdbacks Overview
A billing holdback is a percentage of a billing schedule item that you withhold when the item is billed, and recover on a later item. Holdbacks enable you to hold back part of a payment until the end of delivery in agreement with your customer, so that you can apply contractual withholding within your estimate instead of tracking it outside the system.
You apply holdbacks to the items of a custom billing schedule. Each item can withhold its own percentage, and any item can be marked to release the holdback that earlier items withheld. A single schedule can therefore have several release points rather than one final milestone. For more information about entering holdbacks, see Applying a Billing Holdback.
Holdbacks are available on fixed price records only. They are not available for Time and Materials records.
Holdback (%)
The Holdback (%) field on a custom billing schedule item is the percentage of the amount of that item to withhold. An item bills its own amount less its own holdback. You must enter a value between 0 and 100. This is validated wherever custom billing schedule items are created or updated, including data loads and integrations, not only when you edit the schedule.
The Holdback (%) field defaults to 0, so existing schedules bill exactly as they did before until you enter a percentage.
Net Payable
Net Payable is the amount that is billed on an item after its holdback is withheld. It is calculated as follows:
Net Payable = Amount * (1 - Holdback (%) / 100)
The result is rounded to the number of decimal places used by the currency of the record.
Net Payable is calculated as you work and is not stored on the record, so you cannot report on it, filter by it, or add it to a page layout. The amount that is released is stored in the Released Holdback Amount field on the estimate milestone, and you can report on that. For more information, see Estimate Milestones Fields.
Releasing Withheld Holdback
Items are processed in billing date order. As each item is billed, the holdback it withholds is added to a running total. When you select the Release Holdback field on an item, that item bills its own net amount plus the total holdback that earlier items withheld.
An item with the Release Holdback field selected does not release its own holdback. If the item also has a Holdback (%) field, that percentage is withheld as normal and carries forward to the next item that releases holdback.
The table Billing Holdback on a Four-Item Schedule details a schedule with a total of $12,000 divided equally across four items, where the first three items each withhold 10%.
| Item | Holdback (%) | Release Holdback | Amount | Billed Amount |
|---|---|---|---|---|
| 1 | 10 | Deselected | $3,000 | $2,700 |
| 2 | 10 | Deselected | $3,000 | $2,700 |
| 3 | 10 | Deselected | $3,000 | $2,700 |
| 4 | 0 | Selected | $3,000 | $3,900 |
The first three items each withhold $300, so $900 accumulates. Item 4 withholds nothing and releases the accumulated $900, billing $3,900. The total billed across the schedule is $12,000, which matches the schedule total.
Unreleased Holdback
A schedule has unreleased holdback when the total withheld across its items is greater than the total released. While a schedule is in this state, a warning is displayed against the record in the Estimate Milestones grid, showing the outstanding amount. The warning does not prevent you from continuing to work on the schedule.
You must release the outstanding holdback before you can create a project from the estimate. For more information, see Creating a Project from an Estimate.
Holdbacks on the Project
When you create a project from an estimate, each custom billing schedule item becomes a milestone on the project. The milestone amount is the amount that is billed for that item, so a milestone for an item that withholds holdback carries the net amount, and a milestone for an item that releases holdback carries its net amount plus the released total. The released amount is also recorded in the Released Holdback Amount field on the estimate milestone.
Because milestone amounts are net of holdback, figures elsewhere in the estimate that are derived from milestone amounts, such as those in the Estimate Financial Summary window, also reflect the amounts after holdback.