Why Managing Retainage in AR Software — Not Spreadsheets — Is Critical for Subcontractors

Retainage is a fact of life for subcontractors. It protects project owners and general contractors by holding back a percentage of your payment until a project (or major phase) is fully complete.
But while it protects others, retainage can quietly choke your cash flow if you’re not tracking it carefully.

At Cotillo, we believe subcontractors deserve a better way. Managing retainage with spreadsheets—or worse, not managing it at all—puts your business at unnecessary risk. Here’s why modern subcontractors are moving retainage management into purpose-built software.

What Is Retainage?

Retainage is a portion of the contract amount (often 5-10%) that’s withheld from each invoice to ensure work is completed to satisfaction.
It’s standard in construction, HVAC, electrical, and many other project-based industries.

Example:

• You invoice $100,000
• 10% retainage = $10,000 withheld
• You receive $90,000 now and wait for the $10,000 until project closeout

Seems simple — but across multiple jobs, invoices, and months, untracked retainage becomes a serious cash flow blind spot.

Why Subcontractors Must Manage Retainage Proactively

1. It’s Real Money — Don't Lose Sight of It

Retainage is your earned money, just temporarily withheld.
If you don’t track it carefully:

• You may never follow up to collect
• You might understate your true accounts receivable
• You could miss deadlines for final submission or release

Every dollar of retainage ignored is a dollar stolen from your future.

2. Spreadsheets Are a Dangerous Way to Track It

Some subcontractors use Excel or Google Sheets to track retainage amounts. But spreadsheets:

• Get outdated fast
• Are prone to manual errors
• Don't alert you when retainage is due
• Don’t tie directly to the original invoices
• Require constant babysitting

In a busy AR department—or even for a single admin juggling multiple projects—spreadsheets simply aren’t reliable enough.

3. Retainage Affects Your Cash Flow Planning

When you don’t have real-time visibility into how much retainage is outstanding:

• Cash flow projections are inaccurate
• You might misjudge your available working capital
• You may not pursue final payments aggressively enough

Knowing exactly how much is tied up in retainage lets you plan better — and close out faster.

4. Poor Retainage Tracking Hurts Customer Relationships

When final billing gets messy, customer trust erodes.
Software ensures:

• You can present a clear, professional breakdown of retainage owed
• You can invoice for release at the right time
• You avoid disputes caused by missing or misapplied records

Good retainage management strengthens trust instead of introducing friction at the finish line.

How Cotillo Solves Retainage Challenges

Cottilo was designed with subcontractor realities in mind — not general accounting needs.
Our retainage management features include:

• Automatic Retainage Tracking:
  When you create an invoice, Cotillo calculates and tracks retainage automatically based on your contract settings.
• Real-Time Retainage Visibility:
  See a running total of retained amounts by project, invoice, and customer — no spreadsheets needed.
• Release Reminders and Workflows:
  Know exactly when retainage can be invoiced and automate final release processes.
• QuickBooks Integration:
  Retainage is tracked correctly both in Cotillo and your QBO system for seamless accounting.

With Cotillo, retainage isn’t an afterthought — it’s built into your everyday AR workflow, saving time, reducing mistakes, and speeding up final payments.

Final Thoughts

Retainage is too important to manage manually. Every withheld dollar matters to your bottom line, and mismanaging it could cost you months of cash flow—or even full payment.

Subcontractors who use software like Cotillo to manage retainage:

• Get paid faster
• Improve their cash flow
• Protect their receivables
• Strengthen customer trust

Ditch the spreadsheets. Get serious about your retainage.
[Schedule a Demo] and see how Cotillo can help you master cash flow from day one to project closeout.

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