2 min read
Definition
A retention (often around 5%) is held back from each payment on construction and larger contracts, released after a defined period once the work is signed off and any defects addressed. It ties up cash you have earned but not yet received.
In plain terms
It is money you are owed, sitting with the client as a guarantee of quality, sometimes for months. On a run of jobs, retentions can lock up a meaningful sum.
Why it matters for your company
Track retentions, chase their release, and factor the delay into your cash-flow forecast. Short-term finance can bridge cash held in retentions.
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