Hi Ralls

I like to create one invoice for the total amount of retention I am billing for to send to client.  A second invoice as a credit for the same amount, and apply that credit against the retention amount of the prior invoices.  Both invoices are coded to a cash clearing account so that you can tell when someone forgets the credit (they always do and then that job is over-billed).  Just remember for invoices that had a balance due beyond the retention, you will have to zero out the retention on that invoice so that  the net due returns to its original net due.  When you apply credits to invoices, you cannot specify it to apply to retention unless retention is the only thing left on that invoice.  Now the unpaid portion of the original invoice still has the original due date and is reflected properly on the aging.  I do not use the Sage "release retention" because it messes with the aging dates and unpaid balances besides retention (which is pretty common in construction).

Char,

Thank you for the response. I think I am with you here and understand how this works. But how exactly do you apply the credit invoice to the prior invoices? 

The only way I know to do this is a $0 cash receipt. Is this the correct way? and if so, does it matter if i use the clearing account or our actual cash account?

Yes, a zero cash receipt in 3-3-1.  all values in the paid column, positives on the original invoices, negative on the credit.