A Tradie's Guide to Tracking and Collecting Retention Money
20 October 2026 · 6 min read · By Heaney Accounting
Retention money is a portion of your contract price, usually 5% or 10%, that the head contractor holds back until you have finished all your work and fixed any defects. While it is standard in the industry, it is also the easiest money to forget to chase.
The Risks of Ignoring Retentions
When you do not track retentions, they often fall through the cracks of your accounts receivable. You might finish a project, move onto the next site, and completely forget that a significant amount of your profit is still sitting with a client from six months ago.
- Create a dedicated ledger for retention money held on every project.
- Note the practical completion date and the end of the defects liability period.
- Set a calendar reminder for one week before the release date.
- Issue a tax invoice immediately upon the release date to trigger payment.
Pro Tip: If the head contractor is dragging their feet, send a formal request immediately. Retention money is legally yours, and you shouldn't have to chase it for months after the liability period ends.
By building a system to track these funds, you ensure that your hard-earned profit actually hits your bank account instead of staying in your client's pocket.
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