Retentions

Part of a payment held back until a job is signed off. Common in construction, and often never released.

What it means

A retention is a percentage of each payment — typically 3 to 5% — withheld by the customer until practical completion and then until the end of a defects period.

Why it matters

It is money earned and not received, often for a year or more, and for a subcontractor it is frequently the difference between profit and no profit.

What it looks like in practice

Track retentions separately from ordinary debtors, with the release dates diarised. Chase them; a substantial share are never claimed.

What to watch out for

Retentions treated as ordinary debt and forgotten. And retentions held by a customer who becomes insolvent, where you rank as an unsecured creditor.

Where to get proper advice

Your accountant on how to record them, and a construction solicitor on the contract terms. Some contracts allow a retention bond instead.