Definition
Retention, or retainage, is a percentage of each progress payment, commonly 5 to 10 percent, that a client withholds until a project is fully complete and accepted. It is standard in construction contracts as security for defects and completion. The retained amount is billed on a final retention invoice at the end.
Also called: Retainage, Holdback
Retention in practice
Show retention clearly on each progress invoice: the gross amount for the milestone, the retention withheld, and the net amount due. Track accumulated retention so the final invoice is accurate.
Frequently Asked Questions
Is retention the same as a retainer?
No. Retention is money the client holds back from your payments until completion. A retainer is money the client pays you in advance to secure your services.