Retainage & Progress Billing for Contractors
Retainage (also called retention) is the portion of each progress payment the owner holds back until the job is substantially complete. Progress billing splits a contract into milestone invoices instead of one lump sum. Below: standard retainage rates, how to line-item draws on an invoice, and when to issue the final release invoice.
Last updated: July 13, 2026
Use the Invoice Generator →Steps
- Agree retainage in the contract — Typical commercial jobs hold 5–10% of each draw until punch-list completion. Put the percentage and release trigger in writing before the first invoice.
- Invoice each draw separately — Each progress invoice should show work completed this period, cumulative billed to date, retainage withheld, and net due now.
- Release retainage on final invoice — When the owner signs off, send a final invoice (or retainage release invoice) for the held amount. Match the invoice number sequence you used on earlier draws.
- Document lien waivers if required — Many GCs require conditional waivers with each draw and unconditional waivers after payment clears. Keep waiver dates aligned with invoice dates.
Typical retainage percentages
Residential remodels: often 0–5% or no formal retainage — instead a 10% final payment hold.
Commercial and GC-sub work: 5–10% per draw until substantial completion is common in the US.
Public works: statute may cap retainage (varies by state) — verify on public jobs.
Progress draw example
Contract total $50,000 with 10% retainage on each draw.
Draw 1 — 30% complete: Gross $15,000, Retainage $1,500, Net due $13,500.
Draw 2 — 60% complete: Gross $15,000 (cumulative $30,000), Retainage $1,500, Net due $13,500.
Final — retainage release: Invoice $5,000 held retainage when punch list is signed off.
Invoice vs receipt on progress jobs
Send an invoice for each draw while money is still owed. Send a receipt only when that draw's payment clears — especially if the client asks for proof of a partial payment.
Related: /guides/invoice-vs-receipt-contractor · /guides/what-is-net-30
Common questions
What is retainage on a contractor invoice?
Retainage is money the customer withholds from each progress payment — often 5–10% — until the project reaches substantial completion. It protects the owner if punch-list work is unfinished.
What is progress billing?
Progress billing means invoicing in stages (mobilization, rough-in, substantial completion, final) instead of billing 100% upfront or only at the end. Each stage invoice shows work done and amount due now.
How do I show retainage on an invoice PDF?
Add a line item or summary row: Gross this period, Retainage withheld (X%), Net due. On the final invoice, bill the accumulated retainage as its own line or a single release amount.
Is retainage the same as a deposit?
No. A deposit is paid upfront by the customer. Retainage is withheld from what you earned on each draw — it reduces what you receive now, not an extra payment from the client.
When should I release retainage?
When the contract says — usually substantial completion or final inspection. Do not release retainage before punch-list items in your scope are done unless the owner signs a written waiver.