| Release | Method | Date | Amount | Status |
|---|---|---|---|---|
| Sitework complete | With owner payment | Aug 14 | $15,000 | Released |
| Reduction at 50% complete | Release invoice | Sep 30 | $5,000 | Released |
| Substantial completion | Release invoice | Pending | $76,950 | Awaiting consent of surety |
Why retainage needs its own handling
Retainage is money you have earned and cannot collect yet. General accounting software has no place for that. It either leaves retainage inside ordinary receivables, where it sits in the aging report looking overdue for a year, or it treats it as a discount and understates what you are owed.
EZBilling carries retainage receivable separately from accounts receivable, and retainage payable separately from accounts payable. Your aging shows what is collectible now. Your retainage balance shows what is held until the contract says otherwise.
Held and released, per project and per line
The retainage rate is set on the project and can be overridden on individual schedule of values lines. Every pay application adds to the retainage held on the project.
Because retainage builds up across every application on a job, EZBilling treats it as a project balance, not as a field on one invoice. Retainage outstanding on a project is what has been held less what has been released.
Releasing retainage in the middle of a job
Contracts often reduce retainage at a milestone, for example from 10 percent to 5 percent at 50 percent complete, or release it for a finished phase. EZBilling supports this in two ways.
- Release with a payment: when the owner pays, the payment is split in one screen between the work billed and the retainage being released.
- Formal release: a release generates a collectible invoice for the released amount, which the owner then pays like any other.
Either way the reduction appears on the pay application as retainage released to date, and the net retainage held is restated. Most accounting tools cannot show this, which is why retainage releases so often end up in a side spreadsheet.
A release is not new revenue
Revenue was recognized when the work was billed. Releasing retainage moves an existing receivable toward collection and nothing more. EZBilling posts it that way, so releasing retainage never inflates revenue for the period.
Bonded jobs and consent of surety
On a bonded project, reducing or releasing retainage usually needs the surety to agree. EZBilling produces the consent of surety documents used for a reduction or partial release of retainage and for final payment, in the formats used alongside AIA G707A and G707.
Subcontractor retainage
The same logic runs in the other direction. Retainage you withhold from a subcontractor is held as retainage payable on their subcontract until you release it, so you can see at any point how much of the retainage the owner is holding is really owed onward to your subs.
Frequently asked questions
Can I release retainage mid-project on a G702?
Yes. EZBilling records a release of retainage part-way through a job and shows it on the pay application as retainage released to date, reducing the net retainage held and increasing the current payment due.
How is retainage calculated on a pay application?
Retainage is the retainage percentage applied to work completed and to stored materials. Total retainage is subtracted from total completed and stored to date to give total earned less retainage.
Is a retainage release income?
No. The revenue was recognized when the work was originally billed. A release moves the amount from retainage receivable to accounts receivable or to cash.
Where does retainage go on the balance sheet?
Retainage owed to you is a current asset, shown as retainage receivable, separate from accounts receivable. Retainage you are holding from subcontractors is a liability, shown as retainage payable, separate from accounts payable.
Can different lines on the schedule of values have different retainage rates?
Yes. Retainage can be set for the whole project or overridden line by line.
See it on your own jobs
We will walk through a pay application on a job like yours, from schedule of values to payment.
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