{"id":102161,"date":"2020-03-17T00:00:00","date_gmt":"2020-03-17T04:00:00","guid":{"rendered":"https:\/\/sisn.com\/managing-vendor-retention-with-microsoft-dynamics-365\/"},"modified":"2025-12-18T02:25:58","modified_gmt":"2025-12-18T07:25:58","slug":"managing-vendor-retention-with-microsoft-dynamics-365","status":"publish","type":"post","link":"https:\/\/sisn.com\/en-gb\/managing-vendor-retention-with-microsoft-dynamics-365\/","title":{"rendered":"Managing Vendor Retention with Dynamics 365"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"102161\" class=\"elementor elementor-102161 elementor-100573\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-5db9de58 e-flex e-con-boxed e-con e-parent\" data-id=\"5db9de58\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-3d72c3dd elementor-widget elementor-widget-text-editor\" data-id=\"3d72c3dd\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h2 style=\"text-align: center;\"><strong>How to manage Vendor Retention for Subcontractors with SIS Construct365 Project Cost Management \u2013<br \/><\/strong><strong>Microsoft Dynamics 365 for Finance &amp; Operations<\/strong><\/h2><p>If you\u2019ve worked in the construction industry, you\u2019ll know that subcontractors often play an integral part in completing a project. Due to many reasons, they may frequently be hired to carry out a portion of work as part of a larger project. Managing the risks of hiring your different subcontracts all while controlling your scope and meeting your project deadlines may become overwhelming without the proper processes. As a Microsoft GOLD partner, SIS has developed the\u00a0<a href=\"https:\/\/sisn.com\/en-gb\/construct-365-project-cost-management\/\" target=\"_blank\" rel=\"noopener noreferrer\">Construct365 Project Cost Management module<\/a>\u00a0to work in conjunction with\u00a0<a href=\"https:\/\/sisn.com\/en-gb\/microsoft-dynamics-365-finance\/\" target=\"_blank\" rel=\"noopener noreferrer\">Microsoft D365 F&amp;O\u2019s<\/a>\u00a0Project Management and Accounting, Procurement and Sourcing, and Accounts Payable modules to help you manage your subcontract process from end-to-end \u2013 from the creation of a subcontract to managing payments and the final release of retention to your subcontractor.<\/p><h3><strong><em>What is retention?<\/em><\/strong><\/h3><p>As your subcontractor delivers services, your company may want to retain a portion of the payments made to them. As a general contractor, you may need to hold retention for multiple reasons. One of the most essential would be to ensure that your subcontractor is meeting your desired scope before you pay them in full. Once you are ready to release the retention, you will pay your subcontractor for the remaining retention amount \u2013 this is called the retention process.<\/p><h3><strong><em>Create new vendor retention terms<\/em><\/strong><\/h3><p>Vendor retention terms are determined cooperatively with the vendor, when the contract is negotiated and signed. The retention terms need to be set up in the system before being attached to any project. Vendor retention terms can be created through the Project Management and Accounting Module.<\/p><p>To create new vendor retention terms, go to\u00a0<strong>Project Management and Accounting &gt; Setup &gt; Retention &gt; Vendor Payment Retention Terms.<\/strong><\/p><p>In this screen, you can set up multiple vendor retention terms.<\/p><p><a href=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Microsoft-Dynamics-365-1.png\"><img fetchpriority=\"high\" class=\"size-full wp-image-101568 aligncenter\" src=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Microsoft-Dynamics-365-1.png\" alt=\"\" width=\"1357\" height=\"349\" srcset=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Microsoft-Dynamics-365-1.png 1357w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Microsoft-Dynamics-365-1-300x77.png 300w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Microsoft-Dynamics-365-1-1024x263.png 1024w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Microsoft-Dynamics-365-1-768x198.png 768w\" sizes=\"(max-width: 1357px) 100vw, 1357px\" \/><\/a><\/p><h3>\u00a0<\/h3><h3><strong><em>Setup vendor retention terms on the project<\/em><\/strong><\/h3><p>Once your have set up your vendor retention terms in the system, you can setup project-specific vendor retention terms. You can enter vendor retention terms for a specific vendor, a vendor group, or for all vendors. When a subcontract is created, the system will look to the retention terms setup on the project to see which retention terms to pull.<\/p><p>To setup vendor retention terms on the project, go to\u00a0<strong>Project Management and Accounting &gt; Projects &gt; All Projects &gt; Your project<\/strong><\/p><p>In the Vendor agreements FastTab, add lines.<\/p><p><a href=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Dynamics-365-finance-and-operations-1.png\"><img class=\"alignnone size-full wp-image-101569\" src=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Dynamics-365-finance-and-operations-1.png\" alt=\"\" width=\"1152\" height=\"420\" srcset=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Dynamics-365-finance-and-operations-1.png 1152w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Dynamics-365-finance-and-operations-1-300x109.png 300w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Dynamics-365-finance-and-operations-1-1024x373.png 1024w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-with-Dynamics-365-finance-and-operations-1-768x280.png 768w\" sizes=\"(max-width: 1152px) 100vw, 1152px\" \/><\/a><\/p><h3><strong><em>Create a subcontract<\/em><\/strong><\/h3><p>After you have ensured that your project has been set up with the correct vendor retention terms, it is time to create a subcontract.<\/p><p>To create a subcontract, go to the\u00a0<strong>Action Pane &gt; Project Cost Management &gt; Contracts group &gt; Subcontracts<\/strong>.<\/p><p>Then, go to the\u00a0<strong>Action Pane &gt; Subcontract &gt; New Subcontract &gt; New<\/strong><\/p><p>Create a new subcontract \u2013<\/p><ol><li>Add a speciality.<\/li><li>Add a vendor account and award the vendor.<\/li><li>Add subcontract lines with Project Category, Task Code, Procurement Category, Quantity, Unit, and Unit Price.<\/li><li>Go through subcontractor workflow \u2013 Submit, Approve, and Commit.<\/li><li>The system will create a Purchase Order for that subcontract.<\/li><\/ol><p>Note that the net amount for the Subcontract lines is $9000.00.<\/p><p><a href=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1.png\"><img class=\"alignnone size-full wp-image-101570\" src=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1.png\" alt=\"\" width=\"1866\" height=\"736\" srcset=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1.png 1866w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1-300x118.png 300w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1-1024x404.png 1024w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1-768x303.png 768w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-for-Subcontractors-with-microsoft-dynamics-365-1-1536x606.png 1536w\" sizes=\"(max-width: 1866px) 100vw, 1866px\" \/><\/a><\/p><h3><strong><em>Pay your Subcontractor<\/em><\/strong><\/h3><p>SIS\u2019s proprietary software will allow you to automatically hold your retention until it is ready to be paid, after the final close of the project. When your project manager is ready, he\/she will go to the subcontract that was created to create a payment request. Once the payment request is created, the invoice is sent to the Accounts Payable module. At this point, the job of the PM is done \u2013 the correct retainage amount will be automatically deducted from the full invoice amount if the vendor retainage terms were initially set up on the project. The retainage sits in the retainage payable account until it is ready to be paid, ensuring that the accountant making the payments will never mistakenly pay the retainage, or accidentally pay it twice.<\/p><p>In this example, a payment request was made for the entire line amount, $9000.00.<\/p><p><a href=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1.png\"><img loading=\"lazy\" class=\"alignnone size-full wp-image-101571\" src=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1.png\" alt=\"\" width=\"1854\" height=\"518\" srcset=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1.png 1854w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1-300x84.png 300w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1-1024x286.png 1024w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1-768x215.png 768w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-payment-request-1-1536x429.png 1536w\" sizes=\"(max-width: 1854px) 100vw, 1854px\" \/><\/a><\/p><p>After the payment request is made, the invoice is applied to the purchase order and can be found in the Accounts Payable module. When looking at the voucher, 10% of the invoice amount is held in the Retainage Payable account.<\/p><p><a href=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1.png\"><img loading=\"lazy\" class=\"alignnone size-full wp-image-101572\" src=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1.png\" alt=\"\" width=\"1866\" height=\"323\" srcset=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1.png 1866w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1-300x52.png 300w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1-1024x177.png 1024w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1-768x133.png 768w, https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/Vendor-Retention-microsoft-dynamics-365-voucher-transactions-1-1536x266.png 1536w\" sizes=\"(max-width: 1866px) 100vw, 1866px\" \/><\/a><\/p><h3><strong><em>Conclusion<\/em><\/strong><\/h3><p>In summary, Microsoft D365\u2019s capabilities work in conjunction with SIS\u2019s industry-specific software to meet the needs of all construction companies\u2019 needs. Knowing the risks associated with hiring a subcontractor, the Dynamics 365 system can help your company control the financial processes and foresee the errors that may appear with working with retention.<\/p><h4><strong>For More Information:<\/strong><\/h4><p>If you have any questions or would like to know how\u00a0<a href=\"https:\/\/sisn.com\/en-gb\/construct365-project-cost-management\/\">Project Cost Management<\/a>\u00a0can work for your company,\u00a0please reach out to SIS and we will be happy to show you. SIS Construct 365 Project Cost Management application is Certified for Microsoft Dynamics and listed on the\u00a0<a href=\"https:\/\/appsource.microsoft.com\/en-us\/product\/dynamics-365-for-finance-and-operations\/strategic-industry-solutions.a4f85082-1fd2-443b-a143-1dff063f3d93?tab=Overview\">Microsoft AppSource website<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>How to manage Vendor Retention for Subcontractors with SIS Construct365 Project Cost Management \u2013Microsoft Dynamics 365 for Finance &amp; Operations If you\u2019ve worked in the construction industry, you\u2019ll know that subcontractors often play an integral part in completing a project. Due to many reasons, they may frequently be hired to carry out a portion of&hellip;<\/p>\n","protected":false},"author":1,"featured_media":102163,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[363,364],"tags":[],"class_list":["post-102161","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-d365"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.5 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Managing Vendor Retention with Dynamics 365 | Construction ERP<\/title>\n<meta name=\"description\" content=\"SIS is the leading provider of Microsoft Dynamics 365 Enterprise Resource Planning (ERP), Project Management, and accounting solutions for contractors and professional service companies.\" \/>\n<meta name=\"robots\" content=\"index, follow, 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