Cash & Capital

Retainage Impact on Cash Flow

Calculate how much cash retainage ties up on a contract, how long it's held, and the real carrying cost of that delay.

Contract value$Retainage percentage%Release delaydaysAnnual financing rate%

Carrying cost of retainage$65.75

Retainage held$5,000

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Next Decision

Based on your results, these related decisions are available.

Cash Conversion CycleFold your retainage-affected work into your full cash conversion cycle.

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ReferenceDeposits, Retainage, and Payment TermsThree separate contract terms, receivables timing, deposit size, and retainage, each tie up cash in a different, quantifiable way. Tightening payment terms alone from 45 to 15 days frees $49,315 in cash on $600,000 of annual revenue.

Methodology

Formula: Retainage held = contract value × retainage %. Carrying cost = retainage held × (annual financing rate / 365) × release delay days.

Assumption: A simple-interest carrying-cost model, not a researched benchmark; a real bookkeeper or accountant should sanity-check the release-delay and financing-rate defaults before relying on this for a real decision.

Limitation: Retainage release timing varies by contract type (public vs. private) and jurisdiction in ways this engine does not model.