# How does holdback (retainage) work on invoices?

> Set a default holdback percentage in Finance Settings and WorkSkedge withholds it on every new invoice, showing it as a holdback line on the invoice and the PDF. Withheld amounts build up as the project holdback balance — issued invoices only, not drafts — and you bill them later with Release Holdback on the Invoices page.

- Product: WorkSkedge
- Section: Invoicing & Billing
- Canonical: https://workskedge.com/help/invoicing/holdback-and-retainage-on-invoices
- Updated: 2026-08-31T16:27:33.330203+00:00
- Source: HOLDBACK-RETAINAGE.md, INVOICE-FEATURES.md, FINANCE-SETTINGS.md
- Keywords: holdback, retainage, retention invoice, release holdback, construction holdback percentage

## Steps

1. Open Settings > Finance Settings and select the Holdback / Retainage tab.
2. Set the jurisdiction, default percentage, release days, terminology and tax method.
3. Create invoices as usual — the percentage is withheld and shown as a holdback line.
4. Issue the invoices; only issued invoices add to the project holdback balance.
5. When the job qualifies, open Finances > Invoices and click Release Holdback to bill the accumulated balance.

## Settings

Holdback lives in Finance Settings under the Holdback / Retainage tab.

| Field | What it does |
| --- | --- |
| Jurisdiction | Regional rules applied to holdback handling |
| Default percentage | Percentage withheld on new invoices |
| Release days | Days after substantial completion before holdback is releasable |
| Terminology | Whether the app and PDFs say "Holdback" or "Retainage" |
| Tax method | Whether holdback is computed pre-tax or post-tax |

## How the money flows

1. An invoice on a project with holdback enabled withholds the configured percentage and shows it as a holdback line on the invoice and PDF.
2. Withheld amounts accumulate as the project's **holdback balance**. Only issued invoices count — drafts do not.
3. When the job qualifies, click **Release Holdback** on the Invoices page to bill the accumulated balance. The release invoice draws the balance down.

## Pre-tax vs post-tax

The tax method decides whether holdback is taken before or after tax, and it changes the totals block:

**Pre-tax (typical in Canada)**

```text
taxable base = subtotal - holdback
tax          = taxable base x tax rate
total        = taxable base + tax   <- this is the amount due
```

**Post-tax (typical in the US)**

```text
tax        = subtotal x tax rate
total      = subtotal + tax
amount due = total - holdback
```

On the invoice this reads as Subtotal, Tax, Total, then **Less holdback (%)** and **Amount Due This Invoice**, followed by Amount Paid and Balance Due.

## Practical notes

- The holdback label is customisable, so the invoice can print "Holdback", "Retainage" or "Retention" to match your contracts.
- Holdback is included in the PDF and in the invoice data sent to connected apps and accounting integrations.
- Payments are tracked against the amount due, not the withheld portion — the balance due never includes holdback that has not been released.

## Screenshots

- WorkSkedge invoice totals block showing subtotal, tax, total, less holdback at 7.5 percent, amount due, amount paid and balance due: https://workskedge.com/api/public/help-image/app/v2/invoice-holdback-totals.webp

## FAQ

### Do draft invoices add to the holdback balance?

No. Only issued invoices count toward the project's holdback balance.

### Why does my total look different from subtotal plus tax?

You are on the pre-tax method. Holdback is deducted before tax is calculated, so the stored total already excludes the withheld amount.

### Can I call it retainage instead of holdback?

Yes. The terminology setting changes the wording throughout the app and on the PDFs, including the settings tab name.

### How do I bill the money that was held back?

Use Release Holdback on the Invoices page to create a release invoice, which draws down the accumulated holdback balance.