RETAINAGE MEANING IN CONSTRUCTION.
Retainage, also called retention, is 5 to 10 percent of every pay application withheld until the project or the subcontract is complete. On a $2M project at 10 percent, $200K of earned money is held, sometimes for 12 to 18 months and at zero interest. A $5M subcontractor typically has $250K to $500K held at any time, and a $350K balance costs about $28K a year.
Retainage is the line on a pay application that turns earned money into a receivable you cannot spend. The rate is set in the subcontract before work starts, and the release date is set by completion, so the two decisions that control the cost are made at signing and at closeout.
WHAT IT MEANS.
Retainage is the percentage of each pay application, usually 5 to 10 percent, that a general contractor withholds from a subcontractor until substantial completion or closeout, which makes it earned revenue that is documented and unavailable.
This page defines the term and prices it. The negotiation, the tracking and the collection steps are in the retainage hub.
WHAT THE WORD COVERS.
What it means on a pay app
A pay application shows the work completed to date, then the retainage withheld, then the amount due. The withheld amount is real revenue the subcontractor has earned and documented, and it stays with the general contractor until the contract releases it.
Why it costs more than it looks
Retainage earns no interest, and it is paid for twice: once in the work that was done and once in the line of credit that funds the next job while it is held. A $350K balance costs about $28K a year, and three $600K jobs at 10 percent hold $180,000 at once.
When it comes back
Release follows substantial completion or closeout, and the last portion of a job can stay held for 30 to 90 days past acceptance. A job can last 12 to 18 months, so the first dollar withheld may wait that long.
WHAT IT LOOKS LIKE IN DOLLARS.
A $2M project at 10 percent retainage holds $200K. A $600K contract builds $6,000 of retainage every billing cycle and holds the last $60,000 for 30 to 90 days past acceptance. A burndown clause at 50 percent complete releases $7,500 to $15,000 a month on a $1.5M contract.
A $4M contractor with three active projects has $120,000 to $200,000 of retainage outstanding at any time. A $5M subcontractor typically has $250K to $500K.
WHAT WE CHANGE.
A cut from 10 percent to 5 percent, a burndown clause at 50 percent complete, no retainage on time and material work and a release date 30 days after substantial completion are the asks GCs accept most often. After signature the terms are fixed.
Each job shows the retainage withheld, the release date and who owns the follow up. A balance nobody tracks is a balance nobody collects.
The release date goes on the collection calendar with the closeout documents it depends on, so the request is ready the day the contract allows it.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
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