Retainage: The Money You Earned But Forgot to Collect

What retainage is (and why it hides)

Retainage is the 5–10% of each progress billing that the owner or GC holds back until the job is substantially complete. It's standard in construction. It's also the easiest money to forget about.

Here's why: you bill a $50K draw. The owner pays $45K. You see $45K hit the bank and move on. That $5K retainage? It goes into a holding pattern. Nobody chases it. Nobody tracks it. Six months later, you've got $30K in retainage across 6 jobs and no system to collect it.

The math on a $3M contractor

If your annual revenue is $3M and your average retainage hold is 7%, that's $210K in retainage flowing through your books every year. If you're slow to collect — or if you forget some entirely — you're looking at $20K–$50K sitting uncollected at any given time.

That's not a rounding error. That's a truck payment.

How to track it

1. Separate retainage receivable. In QuickBooks, create a dedicated Retainage Receivable account. Every time you bill, split the invoice: 90–95% goes to regular AR, the rest goes to retainage.
2. Track by job. Every retainage entry should be tagged to a specific job. You need to know: which job, how much, and when it's billable.
3. Set collection triggers. When a job hits substantial completion, the retainage becomes billable. Flag it. Bill it. Chase it.
4. Review monthly. Every month-end, look at the retainage report. Anything over 60 days past substantial completion is money you're leaving behind.

The collection rhythm

• Week 1 after completion: Send retainage invoice with final lien waiver.
• Week 3: Follow up by email with a copy of the contract terms.
• Week 5: Phone call to the project manager or owner.
• Week 7+: Escalate. If the contract says 30 days after completion, hold them to it.

Most retainage collects without drama. The ones that don't are the ones nobody asked for.

Not sure how much retainage you're owed right now? Book a free call — we'll pull the number in 15 minutes.