Mastering Retention Payments in Construction Contracts
24 August 2026 · 6 min read · By Heaney Accounting
Understanding Retention Money
Retention money is a percentage of a contract payment held back by the head contractor or client to ensure defects are fixed. For many tradies, this means a slice of your hard-earned profit is locked away for months or even years.
Best Practices for Tracking
- Always log retention amounts separately in your accounting software.
- Check the contract date for when the retention release is due.
- Send a formal invoice for the retention release as soon as the defect liability period ends.
- Follow up in writing if the payment does not hit your account on the due date.
Pro Tip: Never assume the client will remember to pay you the retention money automatically. Put a reminder in your calendar for one month before the release date to prepare your claim.
If you are a subcontractor, you also need to ensure you aren't paying your own subbies their retention until you receive yours, or you risk a major cash flow gap. Keep clear records to avoid disputes.
Try the related tools
Found this useful?
Get each new guide by email as it's published. No spam, no lock-in.