Retainage Can Add Up
With 5-10% retained on each payment, retainage represents significant working capital. Managing it effectively matters.
What is Retainage?
A percentage of each progress payment held until project completion to ensure:
- Punch list completion
- Final documentation
- Warranty performance
Best Practices
Negotiate Terms
- Try for lower retainage percentage
- Negotiate early release provisions
- Reduction at substantial completion
Track Diligently
- Log retained amounts on each invoice
- Track release triggers
- Invoice promptly upon eligibility
Complete Punch Lists Quickly
Delayed punch list completion delays retainage release. Prioritize closeout activities.
Provide Required Documentation
Final lien waivers, warranties, and as-builts are often required for release.
Cash Flow Planning
Factor retainage into your project cash flow planning. Don't rely on retainage for immediate expenses.
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