Retainage refers to the holding back of a portion of invoice payments by clients until they sign off on a project. This is most common in the construction industry, but also found in any project-oriented company. The client pays the total or accumulated retainage amount later — when the project is over or until he verifies its quality and completeness.
BillQuick Online allows you to set a retainage percentage and a maximum retainage amount in the Project–Billing screen. When an invoice is generated in the Billing Review or Manual Invoice screen, BillQuick Online computes the retainage amount that will be unpaid by the client until the agreed date. In addition, you can specify a maximum amount that a client can retain on a given project.
For example, if you set a retainage of 5% and maximum retainage amount is $2000 on a project, BillQuick Online calculate this 5% on every invoice (billable amount) until the accumulated retainage reaches $2000. You can see the Retainage Amount to Date on the Billing Review screen. After it reaches this maximum limit, full invoice amount is due from the client.
In case of retainage, BillQuick Online computes the invoice amount as:
Amount Due = Services Billed + Expenses Billed + Taxes – Applied Retainer – Discount – Retainage
Hence, if the total bill amount is $1000 and calculated Retainage is $50, the invoice sent to the client will display the bill amount prior to applying the retainage (say $1000) and then the Amount Due after retainage (say $1000 - $50 = $950).