How to use the retainage calculator
- Enter the invoice amount before any retainage.
- Enter the retainage percent from your contract.
- If retainage has been held on earlier invoices, enter the total already held.
- Read the amount paid now, the amount held and the total held after this invoice.
Formula
Retainage held = invoice amount x retainage percent / 100
Amount paid now = invoice amount - retainage held
Total held after this invoice = retainage already held + retainage held on this invoice
Retainage is rounded to the cent half up, and the amount paid is the invoice less that rounded figure.
A $20,000 invoice at 10% retainage
On a $20,000 invoice with 10% retainage, $2,000 is held back and $18,000 is paid now. If $5,000 was already held on earlier invoices, the total held after this one is $7,000.
For a $1,234.56 invoice at 5%, the retainage is $61.73 and $1,172.83 is paid. A retainage percent of 0 pays the whole invoice.
What retainage is
Retainage, sometimes called retention, is money an owner holds back from each payment until the work is finished or accepted. It gives the owner some security that the job will be completed and fixed where needed, and it is a common feature of construction contracts.
The percent, the way it is applied and when it is released all come from the contract. This tool only applies the percent you enter, so it is a quick way to see what an invoice will actually pay.
Rules that vary
Laws and contract terms differ about how much may be held, when it must be released, whether it can be reduced as the job progresses and whether interest is owed. The tool has no built-in percent for that reason, and the page does not say what any state allows. Check your agreement or ask a construction attorney before you rely on a figure.
For the amount to bill on each invoice, use the progress billing calculator. To record the invoice itself, try the invoice generator, and for an alternate payment plan see the milestone payment schedule calculator. If you are paid early, the early payment discount calculator shows what a discount is worth.
Assumptions and limits
- The retainage percent is applied to the whole invoice amount you enter.
- Earlier retainage is a total you supply and is only added in the total held line.
- Release of retainage and any interest on it are not modeled.
- The percent is an input from your contract, not a figure the page provides.
Frequently asked questions
How do you calculate retainage?
Multiply the invoice amount by the retainage percent. A $20,000 invoice at 10% holds back $2,000 and pays $18,000.
When is retainage released?
The contract and the laws that apply to your project decide that, often at completion or acceptance. The calculator does not know the release terms.
Does the percent come from the law?
It comes from your contract, which may be shaped by state rules that this tool does not look up. Enter the figure from your own agreement.
Why is the held amount rounded to the cent?
Money is paid in whole cents, so the held amount is rounded half up to the cent and the amount paid is the invoice less that figure.