Glossary
Holdback
A holdback is a portion of a payment on a construction contract that is withheld until the work is completed and the holdback period required by construction or builders lien legislation has passed. Both the percentage withheld and the release timeline are set by each province's own construction lien statute rather than by one national rule, so they differ from province to province and should always be confirmed against the legislation that applies to the project. Holdbacks payable and receivable also need their own line in a contractor's work in progress schedule so cash flow forecasts are not overstated. Our construction and trades accounting page covers how holdbacks fit into project accounting.
Related reading