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Getting paid

Retention (Retainage)

The short answer

Retention is part of a job’s price, often about five percent, that a client holds back. They release it after completion or a defects period. It is held as proof that the work holds up.

What it means

Retention, also called retainage, is part of the agreed price that a client holds back. The client is usually a main contractor on a bigger job. It is not a discount and it is not a dispute. The contract or quote states the amount. The client releases it once the work has proved itself over a defects or liability period.

The release date matters more than the percentage. If no release condition is stated, the money is easy to write off as gone. Put the release trigger on the quote and the invoice. It can be a fixed date, practical completion, or the end of a defects period. Then you can chase it.

For example

You invoice a $12,000 job with 5% retention. The main contractor pays $11,400 up front and holds back $600. It is due 12 months after completion, once the defects period has passed without a claim.

The mistake to avoid

Agreeing a retention by word of mouth with no release date. Months later, nothing on paper tells you when you get the rest.

See also

Progress InvoicePart Payment

Where this shows up

Guide

Who is actually paying — when the client and the payer are not the same

A business sends you to the job but its accounts department pays. A landlord pays for work a tenant only agreed to. A main contractor books you as one trade of several, and their payment terms rule the job. Confirm the payer before you start, and the invoice practically writes itself once the work is done.

 Guide

Deposits and progress invoices for bigger jobs

How to split a bigger job into a deposit and progress invoices, so you’re never fronting weeks of unpaid work.

 Templates

Agreeing who pays, before the invoice finds out the hard way

Seven messages for confirming the payer before you start. Cover a business’s accounts contact, a letting agent’s property reference, and a main contractor’s terms. One script asks the same question the other way when you hire another trade. Fill in your details once at the top of this page, and every script below updates.

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