About retainage

Retainage is the process of paying for a portion of an invoice and holding back a specified amount until a project milestone has been completed. When using retainage, it is common to have multiple invoices with retainage. The first retainage amount should be large enough to ensure that your project can be completed if the vendor is unable to finish the contracted work.

As the project reaches an agreed-upon milestone or a certain percent-complete, the retained amount on each subsequent invoice is less. When the milestone or percent-complete is reached, funds are then released from the previously retained amount.