How to Collect Retainage: A Follow-Up Plan for Subcontractors

Retainage is money you have already earned, held back until the end of a job, and it is often the last check to arrive and the first one forgotten. This guide shows how to collect retainage as a subcontractor or supplier: how to track it by project, what release usually depends on and a follow-up timeline from substantial completion to payment.

What retainage is and why it gets stuck

Construction retainage (also called retention, or holdback in Canada) is commonly a percentage of each progress billing that the general contractor or owner holds until the project, or your part of it, is complete. It gives the paying party some security that the work will be finished and defects corrected. The percentage, any cap, and when retainage can be reduced or released vary by contract, by state and by province, so check your subcontract and the rules where the project is located.

Subcontractor retainage gets stuck for ordinary reasons:

• Timing. Release comes months after your crew has moved on, when nobody is thinking about that job anymore.
• Dependencies. Your release often waits on the GC’s own release from the owner, which waits on the whole project closing out.
• Paperwork. A missing warranty letter, O&M manual or final lien waiver can hold the money for months.
• No retainage billing. Many subs never submit a formal billing for retainage, so it never enters the GC’s payment cycle.
• Nobody owns it. The PM assumes accounting is handling it, and accounting assumes the PM is.

Construction payments are slow even before retainage enters the picture. Siteline reports that the average US subcontractor waits 96 days to be paid, and 92% of subcontractors floated payroll while waiting for payment.

Example: a drywall subcontractor finishes three projects in the spring with a combined $85,000 of retainage still held. If each release slips by four months over a missing document or an unsent billing, that is $85,000 of earned cash sitting with GCs while the company covers payroll on new jobs.

Set up a retainage tracking log for each project

Collecting retainage starts with seeing it. Your accounting system may show retainage receivable as one balance, but you need it by project, with release conditions attached. A spreadsheet works. Keep one row per project (or per contract, if one project has several) with these columns:

Review the log weekly with whoever runs your billing, next to your AR aging. If you keep a weekly AR report and a 13-week cash-flow forecast, show expected retainage releases as their own line with realistic dates, so they do not inflate your near-term cash.

The free AR toolkit includes a follow-up log you can adapt into a retainage log.

What retainage release usually depends on

Start with your subcontract. Read the retainage clause, the close-out requirements and any pay-when-paid or flow-down language, because they decide what you have to deliver and when. Whether some of those clauses can be enforced varies by state and province, which is a question for your attorney. Release commonly depends on some combination of:

• Substantial completion. Of your scope, the whole project or both, depending on the contract. Get the date confirmed in writing.
• Punch list. Items assigned to you are finished and signed off. Keep dated photos and the sign-off email.
• Close-out documents. As-built drawings, O&M manuals, test reports, inspection sign-offs, attic stock receipts: whatever your contract lists.
• Warranties. Warranty letters, often with a start date tied to substantial completion.
• Lien waivers. Often a conditional waiver with the retainage billing and an unconditional one after payment. Use the forms your contract or local rules require, and ask your attorney if you are unsure.
• The GC’s own release. In many cases the GC releases your retainage only after the owner releases theirs, which depends on the whole project closing out.

Only the last item is mostly out of your hands. The rest is a checklist, and the faster you clear it, the fewer reasons anyone has to hold your money.

A step-by-step retainage follow-up timeline

Here is an example cadence. Adjust it to your contract, the GC’s billing cycle and any dates your attorney gives you.

1. Before substantial completion. Ask the GC for their close-out list and how they want retainage billed. Collect warranties, manuals and as-builts while the crew is still on site.
2. At substantial completion. Confirm the date in writing, submit your close-out package and ask for your punch list.
3. Next billing cycle. Bill retainage as its own pay application or invoice line before the GC’s submission cut-off, with the conditional waiver and backup. Confirm it was received.
4. Two to four weeks later. Call the GC’s project accountant. Is the billing approved? Is anything missing? Has the owner released retainage? What is the expected payment date? Log every answer.
5. Every two weeks after that. Follow up with one specific question each time. When the answer is “we’re waiting on the owner,” ask what the owner’s close-out is waiting on.
6. When it stalls. Escalate to the PM, then to the GC’s controller or the principal you know. Review your attorney’s notice and lien dates for the project, and on Canadian projects check which prompt payment rules apply.
7. When paid. Send the unconditional waiver if one is required, record the payment and close the row in your log.

A short, specific email gets answered faster. For example:

Subject: Retainage billing, [Project name], [Your company], $[amount]

Hi [Name],

Our work on [Project name] reached substantial completion on [date], and our close-out package (warranties, O&M manuals and as-builts) went in on [date].

Attached is our retainage billing for $[amount], with the conditional lien waiver and backup. Could you confirm it is in this month's cycle and let me know if you need anything else from us?

If release depends on the owner's close-out, could you tell me where that stands and the expected date?

Thanks,
[Name]
Accounts Receivable, [Your company]
[Phone]

Working with GCs and their portals

Most GCs pay subs through a monthly pay application cycle, often with an online portal for billings, waivers and compliance documents. Retainage follows the same rules, and that is where it tends to go wrong.

• Know the cut-off. If your retainage billing misses the GC’s monthly submission date, it waits a full cycle.
• Match their format. Use the schedule of values and retainage line the GC set up, and the waiver form they ask for. A billing in the wrong format can sit rejected without anyone telling you.
• Check the portal, not just your inbox. Status changes, rejection notes and document requests often show up only in the portal.
• Save proof. Export or screenshot each submission with its date. If you later need to show when a proper invoice went in, this is your record.
• Talk to the right people. The PM approves the work, and the project accountant or AP team processes the payment. Know both, and keep it friendly: you will probably bid with this GC again.

This is the routine work Extra Myle handles for construction subcontractors and suppliers: retainage logs, portal checks and GC follow-up in your company’s name, as part of our invoice follow-up service.

Lien deadlines and Canadian prompt payment rules

Track lien deadlines with your attorney

Lien rights are one of the strongest protections a subcontractor has, and they come with strict deadlines and notice requirements that differ by state and province. How those deadlines are counted depends on the jurisdiction and the facts of the project, and retainage can stay unpaid long after a deadline has quietly passed.

Do not guess. For each project, ask your attorney:

• which notices you need to send, and by when,
• which lien or claim deadlines apply, and from what date they are counted,
• what records to keep on file in case you need to make a claim.

Put every date in that project’s row of your retainage log and in a shared calendar, with a reminder well ahead of each one. Filing a lien or a legal notice is a legal step: your attorney advises on it and handles it, not your AR team.

Canada: federal and provincial prompt payment

The federal Prompt Payment for Construction Work Act came into force on December 9, 2023. On federal construction projects, it gives the Crown 28 days to pay a proper invoice, then 7 days for each tier below to pay the next one down, according to this summary from Osler. Ontario, Saskatchewan and Alberta have their own prompt payment regimes for projects in those provinces.

Two practical points for holdback. First, date and keep every submission, because payment timelines under these regimes are generally tied to a proper invoice. Second, know which regime applies to each project: federal, provincial or neither. Holdback release rules and remedies such as adjudication depend on that answer, so discuss adjudication or any legal step with a construction lawyer before you act.

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