Construction Retainage Accounting is the practice of withholding a percentage of payments to subcontractors on a construction job until work approved by the contractor is completed. It is used as a financial tool to ensure quality workmanship, protect against unexpected losses due to disputes or defective work, and encourage prompt payment of debts incurred during the course of the project. In most jurisdictions, there are established legal rules regarding how much may be held back in retainage, when payment can be withheld, and who has access to it. Good retainage accounting practices ensure fair treatment for all parties involved, making sure that contractors and subcontractors alike receive timely and appropriate payment for their services.