Retainage
Retainage is a percentage (often 5–10%) a customer withholds from each progress payment until the job is finished, to ensure completion.
On a $10,000 draw at 10% retainage, you'd receive $9,000 now and the $1,000 is held until final completion (and any punch list) is done. Retainage protects the owner but ties up the contractor's cash — across a long job the held-back total can be significant. Rules and caps vary by state and contract.
See also: Retainage calculator
Related terms
- Progress billing — Progress billing is invoicing for a job in installments as work is completed, rather than one lump sum at the end.
- Draw schedule — A draw schedule sets the milestones at which a contractor can bill for (draw) payment on a job — e.g. at rough-in, drywall, and completion.
- Schedule of values (SOV) — A schedule of values breaks the contract price into line items so progress billing can be tied to the portion of each item that's complete.