Retainage Explained: the 10% Everyone Forgets

Retainage is the slice of each payment — commonly 5–10% — held back until the work is complete and accepted. It exists to keep leverage until punch lists clear. It also quietly turns a profitable-on-paper job into a cash-flow squeeze if you don't plan for it.

Both directions at once

Builders live on both sides: a client or lender may hold retainage on your invoices, while you hold retainage on your subs. Track only one side and your cash position is fiction. The money you're owed at completion and the money you owe at completion are different numbers with different dates.

The cash-flow math

On a $900k build with 10% retainage, you're floating up to $90k of completed work until closeout. If your margin is 15%, more than half your profit is parked in the holdback. Bid, borrow, and schedule with that number in view — and invoice the retainage release the moment the punch list clears, because nobody releases it unprompted.

Tracking it without the spreadsheet

NeatBuild handles retainage on customer invoices natively: set the rate, and every invoice shows amount billed, retainage held, and net due — with the invoice counting as paid when the net clears, and the held balance visible until you bill the release.