Examples of How Retainage is Calculated Over the Life of a Project
How retainage is calculated depends on whether it is the first invoice for a project, a subsequent invoice, or an invoice generated after the retainage limit is reached.
Assume that retainage is 10% of total billings, with a retainage limit of $10,000.
First Invoice
This is your first invoice for the project. Current billings are $5,176.00.
| Current Retainage | 517.60 | (10.00% of 5,176.00) | (517.60) |
| Retainage-to-date | 517.60 |
The retainage-to-date amount is equal to the current retainage plus the prior retainage. Since this is the first invoice for this project which includes retainage, prior retainage is zero and the retainage-to-date amount is equal to the current retainage.
Second and Subsequent Invoices
On second and subsequent invoices, Vision displays an additional section on the invoice, Prior Retainage. Prior Retainage amount is equal to the outstanding retainage amount on all previous invoices generated for this project.
Assume that this is the second invoice, and current billings are $7041.97.
| Current Retainage | 704.20 | (10.00% of 7,041.97) | (704.20) |
| Prior Retainage | 517.60 | ||
| Retainage-to-date | 1,221.80 | (Limit 10,000.00) |
The Retainage-to-date amount is equal to the Current Retainage plus the Prior Retainage ($704.20 +$517.60 = $1,221.80).
When the Retainage Limit is Reached
After the retainage limit is reached, no further retainage amount is withheld.
Retainage
| Current Retainage | 1,975.81 | (10.00% of 23,656.49) | (1,975.81) |
| Prior Retainage | 8,024.19 | ||
| Retainage-to-date | 10,000.00 | (Limit 10,000.00) |
In this example, although Current Retainage should be 2,365.65 (10.00% of 23,656.49), this amount cannot exceed 1,975.81, or the limit would be exceeded.
The Retainage-to-date amount is equal to the Current Retainage plus the Prior Retainage. After the limit is reached, this section displays the limit amount.
After the limit for retainage is reached, all subsequent invoices only show the Retainage-to-date amount.
| Retainage-to-date | 10,000.00 | (Limit 10,000.00) |
The Current Retainage and Prior Retainage sections no longer appear on the invoice, because retainage is no longer being applied to this project’s invoices.