How to track retainage aging by job and by owner, with a $1.35 million example

California caps retention at 5 percent and allows 60 days to release it

Federal work runs under the Federal Acquisition Regulation (FAR). FAR 32.103 says a contracting officer may retain part of a progress payment when the contractor has not made satisfactory progress, decides case by case, and may not withhold more than 10 percent of the approved estimated amount. The same section says retainage should not stand in for contract management and that retained amounts are paid promptly once the work is complete.

The payment clause in federal fixed-price construction contracts, FAR 52.232-5, sets the release. When the work is substantially complete, the contracting officer keeps what the government needs for protection and releases the rest. A separately priced building or division of the work is paid without retention once it is complete and accepted.

California public works follow two sections of the Public Contract Code:

1. Section 7201 caps retention at 5 percent of each payment and 5 percent of the contract price. A subcontract cannot carry a higher percentage than the prime contract. An agency can go above 5 percent on a project only after it finds, before bid, that the project is substantially complex.
2. Section 7107 requires the public entity to release retention within 60 days after completion. Completion includes acceptance, or occupation and beneficial use with labor stopped. In a dispute the entity may hold up to 150 percent of the disputed amount.
3. Once the prime contractor receives retention, it has seven days to pay each subcontractor its share, again with up to 150 percent of a disputed amount held back.
4. Retention paid late under section 7107 carries a charge of 2 percent per month on the amount improperly withheld, and the winning side in a collection action recovers attorney's fees.

On private work, the release terms come from the contract. Each job's release trigger and day count belong in the report as data, entered once when the contract is signed.

Each job needs one row with five fields from the ledger and the contract

The report needs one row per job, built from the billing ledger and the contract file:

1. Pull retainage receivable by job as of the report date. This is retainage billed less retainage collected.
2. Pull retainage payable to subcontractors on the same job from the AP subledger.
3. Record the release trigger date. That is the event the contract or statute names, such as substantial completion, acceptance, or a filed notice of completion. Leave it blank while the job is in progress.
4. Compute the release due date as the trigger date plus the days the contract or statute allows.
5. Compute days past due as the report date minus the release due date, and assign each job to a bucket.

Retainage on a job still in progress is "not yet due." Everything else ages from its release due date. A job billed in January and completed in September starts its retainage clock in September.

On the example jobs, Job 104's retainage is 123 days past due

The figures below are an example with round numbers. A general contractor has six jobs open on its books at September 30, 2026. Two are California public works at 5 percent, which is the cap in section 7201, and the subcontracts on those jobs carry 5 percent as well.

Job 101 is the water district job. The district accepted it on June 15, so section 7107 put the release due date 60 days later, on August 14. By September 30 the $200,000 is 47 days past due.

Job 104 for Developer A reached substantial completion on March 31, and the contract allows 60 days for release. That retainage is 123 days past due. Job 106 for the hospital allows 30 days after completion and is 31 days past due.

Job 103 is federal. The contracting officer has found progress satisfactory on every payment, so under FAR 52.232-5 it has paid each request in full and the job carries no retainage.

Developer A holds $750,000, or 56 percent of the retainage

Of the $1.35 million in retainage, $500,000, or 37 percent, is past due. Two-thirds of the past-due amount is 31 to 60 days old.

Developer A holds $750,000, or 56 percent of the retainage, across two jobs. The $150,000 on Job 104 is the oldest balance in the report. Before the next billing goes to Developer A on Job 102, the project manager and the controller can agree on what is still open on Job 104, such as punch list items, closeout documents or lien waivers.

$780,000 of the $1.35 million belongs to subcontractors once it is collected

Net retainage is the receivable minus what the contractor owes its subs on the same jobs. Of the $1.35 million, $780,000 belongs to subcontractors once it is collected, which leaves $570,000 of the contractor's own money.

A late release on Job 101 adds $4,000 a month

On Job 101, if the water district has no dispute to point to, section 7107 adds 2 percent per month on the $200,000. That is $4,000 for each month the payment is late.

The same rule runs the other way. When the district pays, the contractor has seven days to pass $120,000 to the subcontractors on Job 101. A late payment on that share carries the same 2 percent per month, or $2,400.

Set an alert on the receipt of any retainage on a job with retainage payable. The cash team then sees the seven-day deadline on the day the money arrives.

The WIP schedule counts retainage, and this report dates it

The work-in-progress schedule counts retainage inside receivables when it compares cash received to cash paid on each job. The retainage aging report splits that receivable by due date, so a job that looks cash positive on the WIP can still carry six figures of past-due retainage at closeout.

Pay applications feed both reports. The earned value post uses the same billing lines to measure schedule and cost performance.