No one made an error. The report itself was never built to tell the difference between overdue and withheld.
A CFO at an electrical contracting firm is prepping for a credit line renewal meeting. The banker asked for the AR aging summary a week ago, and they are looking at it now before they sends it over. The 90-plus day column shows $214,000. For a company this size, that number will get questions.
They knows the answer before they finishes the call with thier controller. Almost all of it is retainage: 10 percent held back across a dozen active jobs, sitting there because the contracts say it can't be released until specific conditions are met, not because anyone stopped paying. But the report doesn't say that. It just shows a number in a column labeled past due, and the banker doesn't know the difference unless she explains it.
That is the real problem with how most electrical contractors track retainage: an aging report that can't separate retainage from true past-due debt is incomplete by design, and incomplete numbers get read as bad ones.
The Report Isn't Wrong. It's Incomplete.
Retainage is a standard clause on nearly every construction contract. A general contractor holds back 10 percent of each billing, typically the amount tied to the AIA G702 pay application, until the job hits a defined milestone: substantial completion, final inspection, punch list closeout. That holdback is not a payment problem. It is a contractual mechanism that exists on almost every job in the industry.
Most accounting systems have no place to record that distinction. They were built for general businesses that invoice and expect payment on standard terms, not for an industry where a piece of every invoice is intentionally withheld for months by design. So the system does the only thing it knows how to do: it counts days since the invoice date and puts the whole balance in a bucket.
What Retainage Actually Is, and What It Isn't
Retainage is money a contractor is not yet allowed to collect, under the terms it agreed to when it signed the contract, not money it failed to collect. The wrong framing here causes its own damage.
That distinction matters because it rules out a certain kind of fix. No accounting platform, no reporting tool, and no software vendor can turn contractually withheld retainage into cash on a faster timeline than the contract allows. The job still has to reach the milestone the contract specifies. What changes with better tracking is not when the money becomes collectible, it's whether anyone reading the report can tell the difference between collectible and withheld in the first place.
Where the Fix Actually Lives
Sage Intacct's AR aging report carries retainage in its own column, separate from the standard 30, 60, and 90-day past-due buckets. A controller pulling that report for a lender sees two numbers instead of one: what is actually collectible right now, and what is being held under contract until the job closes out.
That single change turns a $214,000 red flag into a five-minute conversation instead of a credit committee meeting, because the banker is really asking how much of this is genuinely at risk, and the aging report now answers that directly instead of forcing someone to explain it after the fact.
Why This Matters More at Renewal Time Than Any Other Time
A distorted aging report is a background annoyance most months. At a credit line renewal, a bonding review, or any point where a lender or surety is actively evaluating the business, it becomes the thing the whole conversation turns on.
- Lenders and sureties routinely discount receivables sitting past 90 days unless retainage is clearly broken out, which means unclear reporting can shrink a company's effective working capital on paper, even though nothing was actually lost.
- A collections team working off an undifferentiated aging report chases the wrong accounts, spending time and goodwill pursuing customers who are current and simply holding contractual retainage.
- A CFO who can't separate true past-due balances from retainage at a glance is making working capital and credit decisions on a number that overstates risk in one direction and hides it in another.
None of these are software problems in the narrow sense. They are visibility problems that happen to be solvable with software, which is a different thing. The contract terms don't change. What changes is whether the person reading the report has to reconstruct the truth by hand or can just see it.
Frequently Asked Questions
How much retainage is normal on an electrical contracting job?
Ten percent per pay application is the standard figure, matching the AIA G702/G703 format most electrical subs bill against. Some contracts step the percentage down or cap it once a job passes a set completion threshold, but the rate itself is set by the contract, not by any accounting system.
Does retainage sitting in the aging report actually affect bonding capacity?
It can. Underwriters routinely discount receivables sitting past 90 days unless retainage is clearly broken out, so an aging report that lumps everything together can understate a contractor's real working capital right when a bonding line or credit renewal is under review.
If retainage can't be collected early anyway, what does separating it actually change?
Nothing about when the money becomes collectible changes. What changes is whether the person reading the report, a controller, a banker, or a surety, can tell the difference between money that's overdue and money that's simply not due yet, without someone walking them through it by hand.
Know What's Actually Collectible
The CFO in this scenario had an aging report that couldn't tell her story for her, so she had to tell it herself, on a call, under time pressure. Sage Intacct separates retainage at the point of posting so the next aging report she pulls already makes the distinction the bank is asking about.
