Pay Applications and Retainage
On a commercial contract you don't send one invoice when the job is done. You bill each month for the work done so far, the general contractor holds back a percentage of every payment (the retainage) until the end of the job, and every payment is traded for a lien waiver. Get the numbers wrong and the contractor's accounts department sends the application back, and you wait another month to be paid.
Commercial Glazing does the arithmetic and the paperwork. You say how far along each part of the job is; it works out what's due, makes the invoice, the application PDF and the waiver.
This article assumes the contract has been awarded. For bids, submittals and the rest of the contract, see Commercial Glazing: from bid to closeout.
The words, in plain English
- Schedule of values: the contract split into the lines you bill against. Each line has a scheduled value, and the lines add up to the contract sum.
- Percent complete: how much of a line's work is installed.
- Stored materials: glass and metal delivered to the site but not installed yet. Most contracts let you bill for it.
- Retainage: the percentage the contractor holds back from each payment, usually 10%, paid at the end.
- Previous certificates: what earlier applications already billed, less their retainage.
- Current payment due: what this application asks to be paid.
The schedule of values
When the award is recorded, the schedule of values is set up from the contract:
- one line per opening, with its glass, fabrication, labor and hardware together;
- one line for each other item on the estimate;
- a Sales tax line, if the contract carries tax.
Many contractors tell you how they want the schedule broken down: by elevation, by floor, or with separate lines for material and labor. Do it before the first application, in the Schedule of values card on the Pay apps step. Rename lines, change their values, Add a line, or remove one, then Save the schedule. The lines must still add up to the contract: the card tells you how much is still to place or too much until they do.
Once a line has been billed on an application, only its description can change (it shows a lock). Approved change orders add their own lines.
Filling in an application
At the end of each billing period:
- On the Pay apps step, press Start application 1 (2, 3 …). Set the Period ending, usually the last day of the month, and Start it. Every line starts where the last application left off.
- For each line, enter the % complete of the installed work, and the dollar value of materials Stored now on site. This period and Balance work themselves out.
- Check Retainage withheld. It comes from your settings, and can be changed for this one application if the contract says so.
The summary at the top updates as you type, and the draft saves itself as you go. Nothing is billed until you submit.
Two rules keep the application honest:
- Work can't go backwards. A line can't be less complete than it was on the last application.
- A line can't be billed past its value. Work and stored materials together can't be more than the line's scheduled value. When stored glass is installed, it stops being stored and becomes % complete: move it across. 100% on a line (or Every line to 100%) does that for you.
The application summary
This is the page the contractor reads, in the industry's standard layout:
| Line | What it is | |
|---|---|---|
| 1 | Original contract sum | The awarded contract. |
| 2 | Net change by change orders | Approved change orders, plus or minus. |
| 3 | Contract sum to date | 1 + 2. |
| 4 | Total completed and stored to date | Work installed plus materials stored, across every line. |
| 5 | Total retainage | The retainage percentage of completed work (5a) and of stored material (5b). |
| 6 | Total earned less retainage | 4 − 5. |
| 7 | Less previous certificates for payment | Line 6 of the last application. |
| 8 | Current payment due | 6 − 7. |
| 9 | Balance to finish, including retainage | 3 − 6. |
A worked example
Harbor View Apartments, awarded by Hartwell Construction, with 10% retainage. The contractor asked for a two-line schedule of values:
| Line | Description | Scheduled value |
|---|---|---|
| 1 | Storefront SF1–SF3, north elevation | $3,565.00 |
| 2 | Entrance doors and sidelites | $1,450.00 |
| Contract sum | $5,015.00 |
Application 1 (period ending October 31)
The storefront framing and glass are 40% installed. The entrance glass isn't installed yet, but $500.00 of it has been delivered and is stored on site.
- Line 1: 40% complete = $1,426.00
- Line 2: 0% complete, $500.00 stored
| 3 | Contract sum to date | $5,015.00 |
| 4 | Total completed and stored to date | $1,926.00 |
| 5a | 10% of completed work ($1,426.00) | $142.60 |
| 5b | 10% of stored material ($500.00) | $50.00 |
| 5 | Total retainage | $192.60 |
| 6 | Total earned less retainage | $1,733.40 |
| 7 | Less previous certificates | $0.00 |
| 8 | Current payment due | $1,733.40 |
| 9 | Balance to finish, including retainage | $3,281.60 |
The invoice reads:
| Line | Amount |
|---|---|
| Line 1: Storefront SF1–SF3, north elevation | $1,426.00 |
| Line 2: Entrance doors and sidelites | $500.00 |
| Retainage withheld (10%) | −$192.60 |
| Total | $1,733.40 |
Application 2 (period ending November 30)
Everything is installed. Both lines go to 100%, and the $500.00 of stored glass is now installed work, so the stored amount goes back to $0.
| 4 | Total completed and stored to date | $5,015.00 |
| 5 | Total retainage (10% of $5,015.00) | $501.50 |
| 6 | Total earned less retainage | $4,513.50 |
| 7 | Less previous certificates | $1,733.40 |
| 8 | Current payment due | $2,780.10 |
| 9 | Balance to finish, including retainage | $501.50 |
The invoice bills only what moved this period: $2,139.00 on line 1 and $950.00 on line 2, less $308.90 of further retainage (the $501.50 now held, minus the $192.60 held before). Total: $2,780.10.
The retainage release
The $501.50 balance is the retainage. Once the punch list and closeout are done, it's billed on its own invoice: $501.50.
Add it up: $1,733.40 + $2,780.10 + $501.50 = $5,015.00, the whole contract.
Submitting
When the numbers are right, press Submit application. You're told exactly what will happen, then:
- An invoice goes on the contractor's account: one line per schedule line billed this period, and a negative Retainage withheld line, so the invoice total is the current payment due. It's an ordinary invoice: payments, statements, the customer portal, aging and your accounting all see it.
- The application PDF, the summary plus the continuation sheet with every line, is attached to the job. Send it with the invoice, or upload it to the contractor's own portal if they use one.
- A conditional lien waiver is made (if waivers are automatic).
A submitted application can't be changed. Many contractors want to see a draft (a "pencil copy") before you submit. Agree the numbers with their project manager first. A draft can be changed freely, or thrown away with Delete draft.
After you submit
The Applications list on the Pay apps step shows each one:
- Waiting for approval until the contractor signs off. Press Contractor approved it when they do.
- Approved, waiting for payment. Take a check with Cash / check; card payments go through the invoice page.
- Paid. If waivers are automatic, the unconditional waiver is made for you.
Lines shows the application's figures again, and PDF opens the document.
Across all your contracts, the Pay applications page under Commercial Glazing shows who is Due for an application (nothing billed yet this month), who is waiting for approval, and how much retainage you're owed.
Lien waivers
A lien waiver is your written promise not to put a lien on the building for work you've been paid for. There are four kinds, and Suprata makes each at the right moment:
| Waiver | When | Amount (in the example) |
|---|---|---|
| Conditional waiver on progress payment | With each application. Only takes effect once the payment clears. | $1,733.40 through October 31 |
| Unconditional waiver on progress payment | When that application is paid. | $1,733.40 |
| Conditional waiver on final payment | With the retainage release. | $501.50 |
| Unconditional waiver on final payment | When the retainage is paid. | $501.50 |
Each is a PDF on the job, made out for the signer and title in your settings, ready to sign. In the Lien waivers card, Mark sent when you give it to the contractor and Mark signed when it's signed. If waivers aren't automatic, Make a waiver creates one by hand.
Check your state's rules. Some states, California, Texas, Georgia, Arizona and Nevada among them, require their own statutory waiver forms, word for word. A waiver in any other wording may not count. If your state is one of them, put the same amounts and dates on the state form, and ask your attorney if you're not sure.
The retainage release
Retainage is held on installed work and, if your settings say so, on stored materials too. The Retainage card shows how much is held.
When the work is complete and the punch list is done, Bill the retainage. It makes one invoice, Retainage release, for everything held, plus the conditional waiver on final payment. When it's paid, the unconditional final waiver follows.
Billing the retainage is the final billing on the contract: no more applications can be made after it. So finish the last progress application first, and make sure every approved change order has been billed.
Closing the contract
The contract closes by itself once it's fully billed, the retainage is billed, every invoice is paid, and the punch list is done. Until then, the Closed step lists what's still outstanding: an open punch item, unbilled retainage, an unpaid invoice.
Common mistakes
Leaving stored materials on a line after they're installed. The application won't save ("Stored materials that went in count as work complete"). Move the value into % complete.
Billing ahead of the work. If you claim 60% when the superintendent sees 40%, the contractor cuts the application and pays late. And since work can't go backwards, you can't correct it next month either.
Submitting before the contractor's review. Once it's submitted, the application and its invoice are fixed. Get the pencil copy agreed first.
Handing over an unconditional waiver before the money clears. The conditional waiver exists so you never have to. Give the unconditional one only when the payment shows Paid.
Billing the retainage too early. It closes the contract to further applications. If a change order is still waiting for approval, wait for it.
Restructuring the schedule after the first application. Once a line is billed, only its description can change. Match the contractor's breakdown before application 1.