How to Bill Retention in Procore

Understanding Retention in Construction

Retention, sometimes called retainage or holdback, is a common practice in the construction industry. In essence, a portion of the contract’s total value—usually between 5% and 10%—is withheld from interim payments. This retained amount is kept until the work is considered substantially complete and meets the quality standards outlined in the contract.

Retention serves several purposes:

• Quality Assurance: Retention motivates contractors and subcontractors to finish the work to a high standard.
• Defect Correction: It provides leverage to ensure that any defects or deficiencies are addressed.
• Project Completion: Retention offers an incentive for completing projects on schedule.

In Procore, retention is managed through various tools, including subcontractor invoices, payment applications, and progress claims. Billing retention accurately is vital to maintain clear financial records and ensure timely cash flow when the conditions for release are met.

Why Proper Retention Billing Matters

Accurate retention billing creates a foundation for successful project financial management. When handled correctly through Procore, it establishes clear expectations and protects all parties involved in the construction process.

Retention serves as a powerful risk mitigation tool for project owners. By temporarily withholding a percentage of payments, owners gain protection against incomplete or defective work. This financial buffer provides peace of mind throughout the construction process and ensures contractors remain motivated to address any issues promptly. The practice also creates natural checkpoints for quality assurance throughout the project timeline.

For contractors and subcontractors, understanding retention billing helps with accurate cash flow forecasting. While retention temporarily reduces available funds, proper tracking in Procore ensures these amounts remain visible and recoverable upon meeting contractual requirements. Contractors who master retention billing can better plan their financial needs and avoid cash flow surprises that might otherwise impact operations.

Transparency represents another significant benefit of proper retention billing. Procore's detailed invoicing tools provide clear breakdowns of billed amounts, retained percentages, and release conditions. This transparency proves invaluable during financial audits, internal reviews, and when resolving potential payment disputes between project stakeholders.

How Retention Functions in Procore

Procore's approach to retention management combines flexibility with robust tracking capabilities. The system accommodates various retention scenarios while maintaining accurate financial records throughout the project lifecycle.

When creating subcontractor invoices in Procore, retention appears as an integral part of the Schedule of Values. The platform allows users to adjust retention amounts for individual line items directly within each invoice. This granular control ensures compliance with contract-specific retention requirements and accommodates situations where retention percentages might vary across different aspects of the project.

As construction progresses, Procore enables partial retention release through progress claims. This feature proves particularly valuable when certain project milestones trigger the release of previously withheld funds. The system maintains a comprehensive record of retention history, tracking previous withholdings, current period adjustments, and cumulative retained amounts with precision.

For projects utilizing owner contracts, Procore extends retention management capabilities to the Prime Contracts tool. This integration ensures consistent retention handling across all project levels, from owner-contractor relationships to subcontractor agreements. The cohesive approach eliminates discrepancies and provides a single source of truth for all retention-related information.

Procore users should note that the platform offers both legacy and modern retention management experiences. While the underlying concepts remain consistent, navigation paths and specific features may vary depending on your organization's implementation. In all cases, Procore calculates retention as a percentage of billed amounts and tracks release conditions based on project completion status.

Step-by-Step Retention Billing Guide

Navigating retention billing in Procore requires understanding specific steps and system behaviors. The following guide walks through the process of billing retention using Procore's Invoicing tool, focusing on subcontractor invoices for released retention.

The retention billing process begins with accessing the appropriate project environment. After logging into your Procore account, navigate to the specific project dashboard and locate the "Invoicing" tool. This centralized location houses all billing-related functions, including retention management capabilities. Before proceeding, verify that your account has the necessary permissions to modify retention details, as restricted access can prevent successful completion of the billing process.

Once in the Invoicing tool, you'll need to either create a new invoice or modify an existing one. For new invoices, locate the relevant contract and select "Create > Create Invoice" to generate a draft document. When working with existing invoices, navigate to the "Subcontractor" tab, find an invoice with "Draft" status, and click the invoice number to open it for editing. Remember that when multiple invoices exist for the same billing period, only the most recent one allows editing of billed amounts.

Adjusting Schedule of Values

Within the invoice's "General" tab lies the Schedule of Values section where retention adjustments take place. This critical area displays all contract line items along with their associated financial information, including retention amounts.

Locate the specific line items requiring retention adjustments by scrolling through the Schedule of Values. For each relevant item, you'll see a "Total Retainage" or "Total Retention" column showing the cumulative amount withheld to date. This figure represents the pool of funds potentially available for release, depending on project completion status and contractual requirements.

The "Total Retainage Released" column serves as your primary input field for retention billing. Enter the specific amount you wish to release for each line item in this column. For complete retention release, input the full withheld amount (for example, $2,500 if that's the total retention for that line). For partial release, enter the appropriate portion (such as $625 to release 25% of a $2,500 retention).

Procore automatically recalculates the remaining retention balance as you enter release amounts. The system deducts your specified release from the cumulative retention value, providing real-time feedback on the financial impact of your adjustments. This automatic calculation helps prevent errors and ensures accurate retention tracking throughout the project.

Finalizing the Invoice

After entering all retention release values, save your changes to preserve the adjustments. Clicking the "Save" button triggers Procore to display a confirmation banner showing the total retention amount being released on the invoice. This visual confirmation helps verify that your entries match the intended release amount before proceeding further.

The invoice review stage represents your final opportunity to verify retention accuracy. Take time to double-check that all retention and billed amounts align with project requirements and contractual obligations. For documentation purposes, consider downloading a PDF version of the invoice to maintain in your records. This step creates an additional verification point and provides a static record of the retention release.

Once satisfied with all invoice details, submit the document for approval by changing its status to "Under Review." This action initiates Procore's approval workflow, ensuring that authorized personnel verify all billing and retention details before finalizing payment. The structured approval process adds an important layer of financial control and helps prevent retention billing errors from impacting project finances.

User Permissions Requirements

Successful retention billing in Procore depends heavily on having appropriate system permissions. Understanding these requirements helps prevent frustration and ensures smooth financial operations.

Permission requirements vary based on specific retention actions within Procore. To set and release retainage for the most recent invoice, users must have Invoice Administrator status. This elevated permission level ensures that only authorized personnel can modify financial information that impacts payment amounts. For some retention actions, "Standard" level permissions on the Project level Commitments tool suffice, while others (particularly setting initial retention) require "Admin" level access.

The permission structure becomes more nuanced for users serving as invoice or progress claim contacts. These roles can sometimes modify retention amounts with only "Read Only" access to the appropriate tools, provided they appear in the necessary "Private" drop-down lists for downstream collaboration. This flexibility allows for targeted permission grants without providing excessive system access.

Before attempting any retention billing activities, consult your organization's Procore administrator to verify your permission settings. This proactive step prevents workflow disruptions and ensures you can complete all necessary retention tasks without encountering access barriers. Many organizations maintain internal documentation outlining role-specific permissions, which can serve as a valuable reference when navigating retention billing responsibilities.

Managing Multiple Invoices

Construction projects often involve complex billing scenarios with multiple invoices or payment applications covering the same period. Understanding how Procore handles these situations prevents confusion and ensures accurate retention tracking.

When multiple invoices exist for a single billing period, Procore enforces specific editing limitations. The system only allows billed amount modifications on the most recent invoice, protecting the integrity of previously approved financial records. This restriction ensures a clear audit trail and prevents contradictory financial entries that could create accounting discrepancies.

Adding payment schedules after invoice approval requires special attention to retention details. When entering this information, place the work amount being claimed for the current period in the "Proposed Amount" column. Procore then calculates retention based on these entries, maintaining consistency with your established retention percentages and previously billed amounts.

The process for handling retention on progress claims closely mirrors the subcontractor invoice approach. Navigate to the progress claim's "General" tab, locate the Schedule of Values section, and enter retention release amounts as needed for each line item. This consistent methodology across different billing types simplifies training and reduces the likelihood of process-related errors.

Organizations using Procore's legacy tools should note that while navigation paths might differ slightly, the fundamental retention concepts remain unchanged. Legacy interfaces include specific options for setting or releasing retention on various document types, but the underlying calculations and tracking mechanisms function similarly to the modern experience. This consistency ensures that retention knowledge transfers effectively across different Procore implementations.

Avoiding Common Retention Pitfalls

Even experienced Procore users occasionally encounter challenges when billing retention. Awareness of these common pitfalls helps prevent errors and ensures smooth financial operations.

Editing sequence represents one of the most frequent sources of retention billing confusion. When users modify retention data after entering other billed amounts, Procore may recalculate retention based on cumulative values rather than just previously held amounts. This recalculation can create unexpected retention figures that don't align with project expectations. To avoid this issue, always release retention as the first step when editing an invoice or progress claim, ensuring the release applies only to previously withheld amounts.

Bulk-editing retention values presents another potential pitfall. While options like "Release Retainage on All Items" offer efficiency, they can inadvertently overwrite existing entries if used carelessly. This risk becomes particularly significant when dealing with stored materials retention, which often follows different release schedules than standard work items. For maximum precision, consider inputting retention release values manually for each line item, especially in complex billing scenarios with varying retention requirements.

Understanding Procore's retention column structure prevents many common errors. The system displays multiple columns including "Currently Retained," "From Previous Application," and "Released This Period," each serving a specific purpose in the retention tracking process. The "Currently Retained" column shows remaining retention after the current invoice, while "From Previous Application" displays retention carried forward from earlier billing. "Released This Period" captures the amount you're currently releasing, representing your primary input field for retention billing.

Inadequate permissions frequently disrupt retention billing workflows. Users attempting to modify retention without proper system access encounter error messages that delay the billing process and create frustration. Before beginning any retention billing task, confirm that you have the appropriate role assignment (Invoice Administrator, Standard, or Admin) for the specific actions you need to perform. When permission issues arise, consult your Procore administrator to resolve access limitations before proceeding.

Retention Billing Best Practices

Implementing structured approaches to retention billing creates consistency and reduces errors. These best practices help organizations maximize the benefits of Procore's retention management capabilities.

Clear contractual retention terms form the foundation of effective retention management. Before project initiation, ensure that all parties agree on retention percentages, release conditions, and timing expectations. These details should appear explicitly in contract documents, preventing later disputes about retention handling. Well-defined retention terms also simplify Procore configuration, ensuring the system accurately reflects contractual requirements from the outset.

Team education plays a crucial role in retention billing success. Invest time in training your invoicing and accounting teams on Procore's retention features, emphasizing both technical procedures and underlying financial concepts. Regular refresher sessions help accommodate system updates and staff turnover, maintaining consistent retention practices throughout the project lifecycle. Consider developing internal documentation that supplements Procore's resources, addressing organization-specific workflows and requirements.

Consistent data entry protocols significantly reduce retention billing errors. When working with retention values in Procore, implement verification practices such as:

• Double-checking all numerical entries before saving
• Reviewing calculated totals against expected values
• Saving draft versions before final submission
• Conducting peer reviews for complex retention scenarios

These simple practices catch many common errors before they impact financial records, preventing time-consuming corrections later in the process.

Maintaining detailed audit trails supports both compliance requirements and operational clarity. Procore automatically creates system snapshots with each invoice, providing a historical record of retention changes. Supplement this automatic tracking by documenting significant retention decisions, particularly when they involve special circumstances or exceptions to standard procedures. This comprehensive approach ensures that each retention action remains traceable and defensible throughout the project lifecycle and beyond.

Leveraging Advanced Retention Features

Procore offers sophisticated retention capabilities beyond basic percentage tracking. Understanding these advanced features helps organizations address complex retention scenarios while maintaining financial accuracy.

The sliding scale retention feature provides flexibility for projects with variable retention requirements. Rather than applying a flat percentage throughout the project, this approach allows different retention rates based on completion thresholds or specific milestones. For example, you might configure 10% retention until the project reaches 50% completion, then reduce to 5% for the remainder. This graduated approach balances risk protection with improved contractor cash flow as the project progresses successfully.

Integration between Procore and external accounting systems enhances retention management efficiency. Many organizations connect Procore with financial platforms like QuickBooks, Sage, or Xero to streamline data flow and reduce manual entry requirements. When implementing these integrations, pay particular attention to retention code mapping and account assignments to ensure consistent treatment across systems. Proper integration configuration prevents discrepancies that could otherwise create reconciliation challenges at project completion.

Customized retention reporting provides valuable insights for financial management. Procore's reporting tools allow organizations to create targeted views of retention status across projects, contracts, or time periods. These reports help identify retention amounts approaching release eligibility, track retention percentages against contract requirements, and forecast future retention releases for cash flow planning. Regular review of these reports helps organizations maintain proactive retention management rather than reacting to issues after they emerge.

Document attachment capabilities strengthen retention release documentation. When processing retention releases in Procore, utilize the attachment function to include supporting evidence such as:

• Inspection certificates verifying work completion
• Client acceptance documentation
• Lien waivers from subcontractors
• Quality assurance test results

These attachments create a comprehensive record justifying each retention release, simplifying future audits and providing clear evidence if questions arise about release timing or amounts.

Retention Communication Strategies

Effective communication surrounding retention prevents misunderstandings and builds stronger project relationships. Implementing structured approaches to retention discussions benefits all project stakeholders.

Transparent retention discussions should begin during contract negotiations. Clearly articulate retention percentages, release conditions, and timing expectations before work commences. This upfront clarity prevents surprises later in the project when financial pressures may intensify. Consider developing a simple retention summary document that highlights key points in plain language, supplementing the formal contract language with accessible explanations.

Regular retention status updates keep all parties informed about financial holdings and release projections. Use Procore's reporting capabilities to generate periodic retention summaries showing amounts held, release conditions, and anticipated release dates. Share these reports during project meetings or as standalone communications, ensuring all stakeholders maintain awareness of retention status without needing to request this information repeatedly.

When approaching retention release milestones, proactive communication accelerates the approval process. Alert relevant parties several weeks before anticipated release dates, confirming the specific requirements for release approval. This advance notice allows stakeholders to prepare necessary inspections, documentation reviews, or other verification steps without delaying the release process. The proactive approach demonstrates professionalism while improving cash flow predictability for contractors.

Retention dispute resolution benefits from established protocols. Despite best efforts, disagreements about retention release occasionally arise. Having predetermined escalation paths and resolution approaches helps address these situations efficiently. Document the specific individuals authorized to make retention decisions, the evidence required for disputed releases, and the timeline expectations for resolution steps. This structured approach prevents retention disagreements from unnecessarily impacting project relationships or progress.

Maximizing Retention Management Success

Successful retention management extends beyond technical Procore skills to encompass broader financial and project management considerations. These strategies help organizations derive maximum value from Procore's retention capabilities.

Regular system audits ensure retention configurations remain aligned with contractual requirements. Schedule periodic reviews of retention settings, particularly after contract modifications or change orders that might impact retention terms. These reviews help identify discrepancies before they affect billing cycles and prevent retention calculation errors that could otherwise compound over time. Consider implementing a quarterly audit process that systematically examines retention settings across active projects.

Cross-functional training improves retention management effectiveness. While accounting staff typically handle retention calculations, project managers and field supervisors make decisions that impact retention eligibility. Ensure these teams understand how their actions affect retention release timing and requirements. This shared knowledge creates a more cohesive approach to retention management and prevents disconnects between field progress and financial documentation.

Documentation standardization simplifies retention processes across projects. Develop consistent templates for retention-related communications, approval requests, and release documentation. These standardized approaches reduce confusion, accelerate processing, and ensure compliance with organizational policies. Consider creating a retention management playbook that outlines standard procedures, document requirements, and approval workflows for different retention scenarios.

Performance metrics help organizations track retention management effectiveness. Consider monitoring indicators such as:

• Average days between retention release eligibility and actual release
• Percentage of retention releases requiring rework or correction
• Retention amounts released versus held across project portfolio
• Frequency of retention-related payment disputes

These metrics highlight potential process improvements and demonstrate the financial impact of effective retention management practices.

Start Mastering Procore Retention Today

Effective retention management in Procore creates financial clarity and strengthens project relationships. The practices outlined in this guide provide a foundation for confident retention billing throughout the construction lifecycle.

Retention billing represents more than just a financial formality—it's a powerful tool for ensuring quality work and appropriate risk distribution. By implementing structured approaches to retention management in Procore, organizations create transparency that benefits all project stakeholders. The system's detailed tracking capabilities provide visibility into retained amounts, release conditions, and payment timing, reducing disputes and streamlining financial operations.

The journey to retention mastery begins with understanding Procore's fundamental capabilities and extends through implementing best practices for your specific project requirements. Take time to explore the platform's retention features, experiment with different reporting approaches, and develop workflows that align with your organizational needs. Remember that effective retention management balances contractual compliance with practical financial considerations, creating outcomes that protect project interests while supporting healthy cash flow.

Consider scheduling a focused training session for your team to review retention procedures and clarify any questions about Procore's capabilities. This investment in knowledge development pays dividends through reduced errors, faster processing, and more confident financial management. As your organization's retention expertise grows, you'll discover additional opportunities to streamline processes, improve reporting, and strengthen financial controls—all contributing to more successful project outcomes and stronger industry relationships.