Retainage is a portion of each progress payment withheld by an owner or general contractor until all standards are met and the project is complete. Traditionally, this withheld amount varies between 5% to 10% of the total contract value. The primary reasons for retainage include:
Understanding the role of retainage is the first step toward billing it correctly within Procore.
Within Procore, retainage is managed using the Invoicing or Commitments tools. The platform allows users to both set and release retainage based on the progress of work. When work is designated as “substantially complete” in certain line items, the retained funds can be appropriately released as a final payment or as a progress claim.
Here are some important points about how Procore handles retainage:
By understanding these underlying concepts of Procore’s retainage feature, you are better prepared to navigate the specific billing steps.
Before diving into the retainage billing process, several important prerequisites must be addressed to ensure smooth workflow and accurate financial tracking. Setting up these foundational elements correctly will prevent complications later in the project lifecycle and help maintain proper documentation for all financial transactions.
User permissions represent the first critical requirement for managing retainage in Procore. For editing and releasing retainage on the most recent invoice, you need invoice administrator privileges within the system. When making changes during the current billing period, standard permissions on the Commitments tool become necessary, along with inclusion on the 'Private' list if downstream access applies to your role. Without these permissions properly configured, users may encounter frustrating roadblocks when attempting to process retainage.
Contract setup accuracy forms another essential prerequisite for successful retainage management. The subcontractor must be correctly added to the appropriate contract as the 'Contract Company,' and the commitment must maintain approved status within the system. Additionally, the billing period needs proper creation and activation within Procore's Invoicing tool to ensure all transactions align with the project timeline and contractual agreements.
Supporting documentation plays a crucial role in the retainage billing process, providing verification and context for financial decisions. Gather all required attachments such as lien waivers, progress reports, and any other contractually mandated documentation before initiating the retainage release process. These documents not only support working claims on the invoice but also create an audit trail that protects all parties involved in the financial transaction.
Navigating the retainage billing process in Procore requires attention to detail and a systematic approach to ensure accuracy. The platform provides a structured workflow that guides users through each stage while maintaining proper documentation of all financial transactions related to retained funds.
The process begins by accessing the Invoicing Tool within your Procore account. After logging in, navigate to the project's invoicing section and select the "Subcontractor" tab to access the relevant contracts. From this interface, you can either create a new invoice by locating the appropriate contract and clicking "Create Invoice," or modify an existing draft by clicking directly on the Invoice number link to open it for editing.
Once inside the invoice, locate the Schedule of Values section within the General tab. This critical area displays each line item along with specific retainage columns that track withheld amounts. Scroll horizontally until you reach the "Total Retainage Released" column, which allows you to enter the amount you wish to release for each line item. For complete release, enter 100% of the retained value; for partial release, enter the appropriate percentage (such as 50%) of the total amount currently being held.
After entering all retainage release amounts, save the invoice to confirm your changes. A confirmation banner will appear showing the total retainage being released on this particular invoice. If required by your project protocols, attach supporting documentation by scrolling to the Attachments card and uploading any necessary files that verify completion or quality standards. Finally, if creating a payment schedule after approval, enter the "Proposed Amount" for work claimed during this period to complete the billing cycle.
User permissions serve as the foundation for secure and accurate retainage management within Procore. Understanding these permission requirements helps prevent workflow disruptions and ensures that only authorized personnel can modify financial data within the system.
The platform implements several permission levels that control access to retainage functions. Invoice Administrator rights allow users to set and release retainage on draft invoices before due dates, providing oversight for the financial approval process. Standard level permissions on the Commitments tool become essential when releasing retainage during current billing periods, creating appropriate checks and balances within the system.
Downstream collaborators face additional permission requirements when working with retainage. Those with Read Only access must receive designation as invoice contacts to modify retainage amounts, ensuring proper authorization while maintaining security protocols. For owner invoices, Admin level permission on the Prime Contracts tool becomes necessary for setting or releasing retainage, reflecting the higher level of oversight typically required for these transactions.
Before attempting to bill retainage, verify that all team members have appropriate access rights to prevent delays or errors. Permission issues rank among the most common obstacles in the retainage process, often requiring intervention from system administrators to resolve. Taking time to confirm these settings before beginning the billing process saves considerable frustration and prevents potential financial discrepancies.
Understanding retainage through concrete examples helps clarify the process for both new and experienced Procore users. A practical scenario demonstrates how the system handles different release situations while maintaining accurate financial records throughout the project lifecycle.
Consider a subcontractor invoice containing two distinct line items with different retainage amounts. Line Item 1 carries a total retainage of $2,500, while Line Item 2 has $1,250 currently being held. When preparing to release funds, you might decide to handle each line item differently based on completion status or contractual milestones. For Line Item 1, if work has reached substantial completion, you would enter $2,500 in the "Total Retainage Released" column, indicating a 100% release of all retained funds for that particular item.
Line Item 2 might require a different approach if work remains partially incomplete. In this case, you might decide to release only half of the retained amount, entering $625 (representing 50% of the $1,250 currently held) in the corresponding retainage release field. This partial release acknowledges progress while maintaining financial protection until the remaining work reaches completion.
After saving these entries, Procore automatically recalculates and displays the updated retained amounts for each line item. The system shows zero remaining retainage for Line Item 1 and $625 still held for Line Item 2, creating a clear record of the transaction. This flexibility allows project managers to respond appropriately to varying completion levels across different aspects of the project while maintaining accurate financial records.
Procore's evolution has created two distinct approaches to retainage management, with both legacy and modern systems currently in use across different projects. Understanding the differences between these approaches helps users navigate either system effectively while maintaining accurate financial records.
The legacy retainage system operates primarily through the Commitments tool, with detailed columns in invoice detail views handling the setting and releasing of retained funds. This older interface includes bulk release options that, while efficient, sometimes create confusion due to calculation methods based on combined amounts from previous applications and current work. Many experienced users prefer this system due to familiarity with its workflow and terminology, having developed efficient processes around its structure over years of implementation.
Modern Procore experiences offer streamlined interfaces with clearer field designations for "Total Retainage," "Retainage Released," and related values. These updated systems provide more intuitive layouts that reduce the learning curve for new users while maintaining comprehensive tracking capabilities. The redesigned approach simplifies many processes while maintaining the detailed financial controls necessary for proper retainage management.
Many construction teams must work with both systems simultaneously, especially when managing projects initiated under different versions of the platform. This dual-system environment requires flexibility and careful attention to which method applies to specific projects or contracts. Understanding the distinctions between legacy and modern experiences helps teams decide which process best suits their project requirements and team expertise.
Even experienced Procore users occasionally encounter challenges when managing retainage. Recognizing these potential issues before they occur helps maintain smooth financial operations and prevents costly mistakes during the billing process.
Incorrect percentage calculations represent one of the most frequent complications in retainage management. When entering percentages for retention or release, verify that your calculations use the correct baseline—either the overall contract amount or just the previous application. Small errors in these calculations can compound over time, creating significant discrepancies that require extensive reconciliation efforts to resolve.
The sequence of actions within the system significantly impacts accuracy when billing retainage. Entering billed amounts before releasing retainage often leads to confusion and miscalculation as the system applies retention to new amounts. Financial experts typically recommend performing retainage release operations first, then entering billed amounts for new work to maintain clear separation between these transactions.
Permission issues frequently disrupt the retainage workflow when users lack appropriate access levels. Without Admin or Standard permissions, users may find themselves unable to modify retainage fields despite having responsibility for financial management. This situation requires coordination with system administrators to ensure all team members have appropriate access rights based on their roles and responsibilities within the project structure.
Misinterpretation of column labels creates another common source of confusion, even among experienced users. Fields such as "Currently Retained," "From Previous Application," and "Released This Period" may seem straightforward but can be misunderstood in specific contexts. Always reference Procore's documentation when uncertain about field definitions to ensure accurate data entry and prevent financial discrepancies.
Implementing strategic approaches to retainage management creates more efficient workflows while reducing errors and complications. These best practices help construction professionals navigate Procore's retainage features with greater confidence and accuracy.
Advance planning forms the cornerstone of effective retainage management. Align your project billing schedule with contractual milestone dates to create predictability for both your team and project owners. This alignment helps all stakeholders anticipate when retainage will be released, improving cash flow forecasting and financial planning throughout the project lifecycle. Regular review of these schedules ensures they remain synchronized with actual project progress and any contractual modifications.
Careful use of bulk-edit functions prevents unintentional data overrides that can disrupt carefully entered values. While these tools save considerable time when used appropriately, they can also override manually entered figures if applied incorrectly. Perform bulk operations before entering line-specific values whenever possible, and always review the results carefully to verify accuracy. This cautious approach prevents the frustration of lost data while still benefiting from the efficiency these tools provide.
Documentation management plays a crucial role in smooth retainage processing. Maintain comprehensive records by attaching all relevant backup files to each invoice, including progress reports, lien waivers, and quality verification documents. These attachments streamline both internal reviews and contractor audits, reducing delays in the approval process. Establishing consistent file naming conventions and organization systems further enhances this documentation strategy, making information readily accessible when needed.
Clear communication between all stakeholders prevents misunderstandings about retainage expectations and requirements. Maintain open dialogue with project owners and general contractors regarding percentages, billing periods, and any necessary adjustments during invoice creation. This transparent approach builds trust while ensuring all parties share the same understanding of financial arrangements and timelines for fund release.
Procore's retainage functionality extends beyond isolated invoicing processes, connecting with multiple financial management modules to create a comprehensive system. This integration ensures consistency across different aspects of project financial management while reducing duplicate data entry and potential errors.
The Commitments tool serves as a central hub for managing subcontractor and owner contracts, including retainage settings that flow through to invoices. Establishing retainage amounts within this tool ensures consistency across all invoices and progress payments throughout the project lifecycle. Changes made in the Commitments module automatically reflect in related financial documents, maintaining data integrity across the platform.
Payment Applications incorporate retention values automatically when billing for completed work. These applications must synchronize carefully with the invoicing process to maintain accurate financial records and prevent discrepancies between different financial documents. The system's integrated approach ensures that retainage calculations remain consistent regardless of which module generates the financial documentation.
For organizations using external accounting systems like QuickBooks, integration tools such as OneCore create seamless connections between platforms. These integrations map cost codes and retainage values between systems, eliminating manual data entry and reducing potential errors. The automated synchronization ensures that financial data remains consistent across all platforms, creating a unified financial management approach that spans both project management and accounting systems.
Creating efficient processes for retainage management saves time while improving accuracy throughout the project lifecycle. Streamlined workflows reduce administrative burden while ensuring all financial transactions receive proper documentation and verification.
Standardized templates provide consistency across projects and team members when managing retainage. Develop document templates for common retainage scenarios, including partial and full releases, that incorporate all required information in a standardized format. These templates reduce preparation time while ensuring all necessary elements appear in each document, creating efficiency without sacrificing completeness or accuracy.
Regular training keeps team members updated on best practices and system changes that affect retainage management. Schedule periodic refresher sessions that address common questions and introduce new features or improvements to the platform. This ongoing education ensures all users maintain proficiency with the system while incorporating the most current approaches to retainage management.
Automation opportunities within Procore can significantly reduce manual effort in retainage tracking. Explore automated notification settings that alert team members when retainage becomes eligible for release based on project milestones or completion percentages. These automated reminders prevent overlooked retainage and ensure timely processing of all financial transactions related to retained funds.
Periodic audits of retainage records help identify and correct discrepancies before they create significant issues. Establish regular review cycles that compare retained amounts across different system modules to verify consistency. These proactive reviews catch potential problems early when they remain easier to resolve, preventing the accumulation of errors that could otherwise create major reconciliation challenges later in the project.
Mastering retainage billing in Procore creates significant benefits for construction professionals managing complex financial processes. The comprehensive approach outlined in this guide provides the knowledge and practical steps needed to navigate retainage with confidence and precision.
Retainage management represents a critical aspect of construction financial operations that impacts cash flow, risk mitigation, and project completion. By implementing the strategies and best practices described throughout this article, you can transform potentially challenging retainage processes into streamlined workflows that protect all stakeholders while maintaining accurate financial records. The systematic approach to setting, tracking, and releasing retainage creates transparency that builds trust between owners, general contractors, and subcontractors.
Remember that effective retainage management extends beyond technical procedures to include communication, documentation, and strategic planning. Maintain open dialogue with project stakeholders about retainage expectations and timelines while documenting all decisions thoroughly within the Procore system. This comprehensive approach ensures that retained funds receive proper management throughout the project lifecycle, from initial withholding through final release upon successful completion.
Ready to implement these strategies in your next project? Begin by reviewing your current retainage processes against the best practices outlined in this guide, identifying opportunities for improvement and standardization. Update your team's procedures to incorporate these refined approaches, and schedule training sessions to ensure everyone understands the most effective methods for managing retainage in Procore. With these improvements in place, you'll experience more efficient financial operations, reduced errors, and improved cash flow management throughout your construction projects.