Retainage is the percentage a customer withholds from your invoices until certain contract milestones are met or the project is complete. In NYC facility services contracts, building owners and property management companies commonly hold back 5% to 10% on larger jobs like building maintenance projects, renovation-adjacent work, or long-term service agreements. The mechanics of earning the revenue and actually collecting the cash happen at different times, and your books need to reflect that.

The most important thing is to track retainage in a separate account from your regular accounts receivable. Set up an account in QuickBooks called something like “Retainage Receivable” and post the withheld portion there. If you lump retainage into your normal AR, your aging report will show invoices that look 60, 90, or 120 days overdue when they aren’t overdue at all. They’re just not collectible yet. That makes it impossible to tell the difference between a customer who owes you money and is slow to pay versus a customer who is holding retainage as agreed in the contract.

When you invoice a job, record the full amount as revenue because you earned it by doing the work. Then split the receivable. The portion the customer will pay on the normal billing cycle goes to your regular AR. The portion they’re holding back goes to Retainage Receivable. Your income statement stays accurate because the revenue is recognized when earned. Your balance sheet stays accurate because the two types of receivables are separated.

When the retainage is released, typically at project completion or after an inspection period, you move the amount from Retainage Receivable to regular AR and then record the payment when the cash comes in. Some contracts release retainage in stages rather than all at once, so read the terms carefully and track the release schedule.

Cash flow is where retainage really bites. You’ve done the work, you’ve paid your crews, you’ve covered materials and supplies, but 5% or 10% of the contract value is sitting with the customer for weeks or months. If you have multiple contracts with retainage at the same time, that holdback adds up fast. Bronx bookkeepers who work with facility services companies see this regularly and can help you forecast around it so you’re not caught short on payroll or vendor payments while waiting for retainage to come through.

Review your retainage receivable balance monthly. Make sure you’re tracking release dates and following up when retainage is due. Customers don’t always release it automatically. Sometimes you need to submit a formal request or provide final documentation before the holdback is paid out. Treat those release dates like any other collection activity so the money doesn’t sit there longer than it should.