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How To: Manage Holdbacks
1. Background
With Version 4. 2,
The Logger's Edge
now allows users to issue holdbacks and holdback releases on a vendor pay
statement. The holdback functionality allows users to “hold back” a
certain amount of a vendor’s pay for a given pay period. Users will
often hold back a portion of a vendor’s pay during each pay period, and will
release these amounts in one or more re-payments when certain milestones of a
harvesting job are reached.
A few summary points to make about holdbacks:
● Holdbacks are permitted only
with vendors, not employees.
● Taxes (GST, PST) can either be included or excluded from the “base” for holdback calculation via a system setting when the holdback functionality is enabled. Regardless of the inclusion/exclusion of taxes in the calculation of the holdback itself, the full tax amount is still paid out on the statement.
● Holdbacks appear on statements as negative numbers.
● Holdback releases appear on statements as positive numbers.
●
The Logger's Edge
will calculate holdbacks one of two ways:
1. Apply a user-specified percentage to the
overall amount owing to the vendor on the statement; or
2. Apply a user specified $ amount per load
(where the dollar amount can be expressed as $ per weight, $ per volume, or $
per load count.
● Users have the ability to over-ride the holdback amount calculated by The Logger's Edge and enter their own amount.
● Holdbacks can only be released to the vendor that had the original holdback amount deducted from his statement.
● Holdbacks can only be released on a statement that has at least one payment/deduction aside from the holdback. (If a vendor does not have any other activity in the period, you can create a $0 miscellaneous entry for the vendor so the system can create a 'dummy' statement to attach the holdback releases to)
● Any given vendor statement can have one and only one holdback amount on it (enforced at the database level)
● You can create a holdback and release a holdback on the same statement. In general, you will first create a holdback in a prior period and then release the holdback in a subsequent period. You may also want to create a new holdback in the subsequent period, thereby resulting in a holdback (based on current activity) and a release (based on prior activity) appearing on the same statement.
Note to users
using mid-month advances: holdbacks and holdback releases should be handled at
month-end, not at mid-month. The system prevents you from combining
an advance with a holdback or holdback release in some circumstances, but cannot
do so effectively in all circumstances. Therefore, it is incumbent
upon the user to follow the proper procedures if they are using both mid-month
advances and holdbacks. Holdbacks or holdback releases can be
combined with advance COLLECTIONS, but not with actual Advance.
Enabling Holdbacks in Basic Setup
You must be logged in as an administrator in order to enable the holdbacks setting.
The setting is on the Payment tab in the Basic Setup window. There is a frame called Holdbacks. Switch the radio button from Disable to Enable. Also check the “Exclude Tax” box if you do not want the system to include the tax as part of the “base” when it calculates how much to hold back.
This setting will enable an additional set of buttons in the bottom left corner of Statements | Vendor Statements window. One is labeled Holdbacks, and the other is labeled Release.
This setting will also enable a Holdbacks menu item under the Data Entry main menu item.
A note on GST:
GST (and PST) will be paid out in full regardless of whether you include or
exclude GST from the base for calculating the holdback. The include/exclude flag
merely dictates whether the holdback % itself will be calculated on a value that
includes or excludes GST. When configuring the holdback functionality, you
must also decide whether or the hold will take into account tax (e. g.,
GST, PST). Thus if the amount otherwise payable is $10,000 without
GST and $10,700 with GST, and you are applying a certain percentage, say 10%,
you need to decide if the 10% applies to the pre-tax number of $10,000 or the
post-tax number of $10,700. The checkbox 'Exclude Tax' governs
which way the percentage will be applied.
Run Pay Calculator
Run your vendor pay calculator as normal. Select the pay period for which you want to create a holdback.
Create Holdback
Next, view the statements for the vendors for which you want to create a
holdback. The Vendor must appear in the Vendor Statements drop down
list in the pay period for which you want to hold back.
To create a holdback, open the Vendor Statements grid for the correct pay
period. Next, click on the 'Holdback' button.
An entry window will appear that allows you to enter the terms of the holdback
(see below).
There are three overall ways you can apply the holdbacks:
1. Hold back a percentage of all payment issued on a given statement, regardless of whether the payment is for loads, for hourly work, for miscellaneous work, etc. To treat the holdback in this way, leave the default settings just as they are in this window, and simply type in the desired percentage into the window as it appears above (e.g., 5.0 for 5 percent).
2. Hold back a percentage of load-based payment on a given statement, but do not apply the holdback to non-load based payment (such as hourly payment, miscellaneous payment, etc). To treat the holdback in this way, you’ll want to set the settings like this:
The 'Only Apply to Loads' checkbox will limit the holdback to load-based pay only.
3. If you want to holdback a certain $ amount per weight or volume or per load (rather than a certain percentage of the load payment), uncheck the “Is Percent?” box (leaving the percentage amount as 0), and check the “Only Apply to Loads” box. Also, select the basis that you want used in the calculation (e.g., tonne, m3). For example, if you want to holdback $0.50 per tonne, you would set this window to look like this:
(Note that neither the basis of DAY nor of KM is applicable for holdbacks, even though they are listed in the drop-down box.)
4. If you want to apply different percentages to different vendors, you can set up a default percentage for each vendor and then check the 'Apply Vendor Default Percentage' checkbox:
In this case, The Logger's Edge will apply each vendor's default percentage and ignore the percentage entered here. You can still choose to apply the vendor's percentage to all pay or just loads by use of the 'Only Apply to Loads' checkbox.
You set up a vendor's default percentage, when you set up a vendor (from the main menu, go to Setup | Vendors. You can enter the default percentage in the 'Holdback Percent' column.
Note:
The Holdback Percent column is not visible by default. It must be
enabled by a user logged in as an administrator.
Once you’ve entered the terms of the holdback, click OK. You should
see a window like the following. This example shows a 5% holdback
calculated on a 'before-tax' basis.
The blue column indicates that the user can edit the calculated amount directly in the cell to over-ride the calculation done by Logger’s Edge.
When you are satisfied with the holdback amounts for each vendor, click OK. When you click OK, the values are actually stored in the database. Up until then, they are only stored in memory, so if you select Cancel instead of OK, The Logger's Edge will not save your results into the system.
Special
note to Ad Hoc statement users: when using ad hoc statements, the system will
not write the holdbacks or holdback releases to the database when you click OK
at the above window. Instead, the data will be written when you click OK to
leave the entire ad hoc vendor statement grid.
The holdbacks will appear on those statements where a non-zero holdback amount was generated. They will appear at the bottom of the statement immediately after total earnings:
Reviewing and Editing Holdbacks
When you clicked OK from the “Specify Holdback” window above, your holdback amounts were saved to the database. You can review (and edit) those amounts at any point in time under the Data Entry | Holdbacks main menu item.
Remember: include a “-“sign in front of your holdback amount if you edit the amount through this window. Otherwise, the amount will be added to the vendor’s statement, rather than deducted from it. Note that the second tab shows the current net holdback balance (holdbacks less releases) for each vendor over all time.
Releasing Holdbacks
At any point in time, you can release all or part of a holdback to a vendor.
To generate a release, use the “Release” button in the bottom left corner of the
vendor statement grid (this is opened by going to Reports | Vendor Statements
from the main menu.)
When you click release, you will be prompted with the following window, where you can type in the percentage you want to release for all vendors.
When you click OK, you’ll be presented with a grid like the following:
If you don’t want to release the same amount to all vendors, you can edit the amounts calculated by the system in this display grid.
When you click OK, The Logger's Edge will save your releases to the database.
From the vendor statements grid, you can create a formatted statement by click on the 'View Statements' button.
The Holdback Release will appear at the bottom of the statement and will be added to Total earnings. In the example above there is also a new Holdback in the current period. The statement total is the sum of Total Earnings less any Holdback plus any Holdback Release.
