Glossary
Retainage
Also called: retention · holdback
Retainage is a percentage of each payment withheld by the customer until the job is complete and accepted, as security that you will finish the work.
It is standard on commercial and public work and is usually a fixed percentage of every progress payment, released after completion and sometimes after a further period. The money is contractually yours and earned, it is simply not yours yet.
Because it accumulates across every job you run, retainage is frequently the largest single block of a contractor’s outstanding balance — and unlike a late invoice it is not a collection failure, so chasing it is pointless until the release conditions are met. Tracking it separately from ordinary receivables is what stops it distorting your ageing and being quietly forgotten at closeout.
Why it matters to a contractor
It is your cash sitting in somebody else’s account, often for months, and on a job-heavy year it can be most of what you are owed. Contractors who do not track it separately routinely leave releases uncollected simply because nobody was watching for the trigger.
Work it out on your numbers