In this communication, we take a deeper dive into a valuable GCPay feature you may not be familiar with, but could greatly benefit from! 

How to Get the Most Out of GCPay’s Retainage Feature Set

Construction is one of the hardest industries to manage cash flow in, with contractors often facing large up-front costs and frequent, long delays between expenses and payment. The industry’s retainage practices throw another wrinkle into the process. Though retainage is largely dependent on the contract itself, there are state and federal laws that govern retainage, too. Nearly all states have prompt payment laws and other statutes that set retention limits and payment deadlines.

Owners and contractors are not allowed to withhold a percentage greater than the rate set out by these laws. On public projects in California, for example, state law caps retainage at 5% prior to completion and acceptance of the project.

GCPay is continuously evolving its retainage feature set as use cases continue to change and the industry adapts to new regulations. Here are the retention types supported within GCPay:

1. Create a new Application for Payment (AFP).
2. Click the drop-down arrow on the Retainage Type and choose from the following:

• Standard Retainage will apply the designated retention rate to each AFP.
• Variable Retainage will allow you to manipulate the retainage held on each individual line item.
• Frozen Retainage will continue to hold retainage that is already held but will not hold more retainage moving forward.
• Lump Sum Retainage is for Non-Integrated clients only. If you want to only hold a certain dollar amount in retainage, as opposed to a certain percentage on a line item. This is good for situations where the General Contractor just wants to hold, for example, $5,000 in retainage for closeouts or punch list but release everything else to the sub.    
• Capped Retainage allows you to establish a standard rate for the first 50% of a contract and a different standard rate for the second 50% of a contract.

Note: The Capped retainage feature must first be enabled by the GCPay Support Team. Please contact support to activate the feature.

To enable Capped retainage on a subcontractor's SOV, follow these steps:  

1. Create a new AFP
2. Click the drop-down arrow on the retainage type and choose from the following: 
3. Select Capped Retainage
4. Establish your retainage requirements for the first 50% and last 50% of the contract