Retainage: the money you wait for, and how to keep track of it

Every progress payment you bill has a hold-back built into it. The GC keeps a slice of each month's money until the job is finished. That slice is retainage, and it's the reason a sub can finish a job, send the last invoice, and still wait months for the final dollars.

Here is how it shows up on a standard G702 pay application.

• Line 4 is everything you've completed and stored to date.
• Line 5 is the retainage held back. On a standard form it's split in two:
• Line 5a is retainage on completed work.
• Line 5b is retainage on stored materials, which is material delivered to the site but not yet installed. Many contracts hold a different rate on stored materials, so the two lines can differ.
• Line 6 is what you've earned, less the retainage.
• Line 7 is what the GC has already paid you.
• Line 8 is the payment due this month: Line 6 less Line 7.

That means retainage is not a one-time number. Each month it grows by the same percentage of the new work you've done. If the contract holds 10%, then 10% of every new dollar of work is held back until the end.

Three things trip people up.

The percentage is in the contract, not in your head. Look for the retainage rate in your subcontract, and check whether it changes at some point, such as at 50% complete. A reduction after the job is half done is common, and it's worth knowing before the first pay app goes out. If you enter the wrong rate, every month after that is wrong by the same amount.

Stored materials can carry a different rate. If you bill materials on site as well as installed work, check whether the GC holds back the same percentage on both. Some contracts hold less on stored material, and some hold nothing at all.

Retainage is released at close-out, not automatically. Most GCs release it after the punch list is cleared and the final pay app is submitted. Until then it sits on the GC's books, and it's yours to chase. Keep a running total on every pay app, so you always know what's still owed to you before you start the close-out conversation.

The same logic applies on a private job. The client holds the retainage, and the percentage and release conditions should be in the agreement you signed with them. Write them down before the first invoice, not after the first argument.

A simple habit solves most of this: write the retainage rate and the release conditions on the first page of your job file, and check Line 5 against your own total every month. If Line 5 doesn't match your running total, stop and find out why before you send anything.

When you're billing several jobs at once, keeping retainage straight across all of them by hand is where a spreadsheet starts to fail. NailMyPay tracks the held amount on each job and shows it on the close-out page, so the release is always in view. The first pay app is free, so you can run one of your own through it and see how the numbers come out against your contract.