Retention is already in your valuations. You deduct it from what you pay out. Your client deducts it from what they pay you. It is written in the contract and it is usually 5 to 10 percent. It exists to protect the client until the work is finished. It is also money you have earned that often stays hidden because it is stored in a spreadsheet or a PDF instead of in your live project finances. A clear definition of retention is here and a longer explanation is here.
What retention is
Retention is the part of each construction payment that is held back until the job is complete and approved. Most UK contracts do it. The amount is normally agreed in the contract. Often 5 percent. Sometimes 10 percent. It is taken off the valuation and shown on the payment certificate. It is released when the work is signed off or when the defects period is over.
The important part. Retention is not future income. It is earned income that you have not collected yet.
Where retention is created
There are two moments.
- You send a valuation or application for payment to the client. The client deducts retention.
- Your subcontractor sends you a valuation or application for payment. You deduct retention.
So you have retention that should come in. You have retention that should go out. Both start from valuations. Both often end up split across projects and inboxes.
Why retention gets forgotten
Dates move. Practical completion can shift. Warranty or defect periods can change. If you guessed the date in Excel on day one then you now have the wrong date.
Valuations live in email. A lot of valuations and payment certificates arrive in a shared accounts inbox. Someone has to open the email and move the number into the project sheet. If that person is off then the retention is invisible.
Client and subcontractor retention are separate. You might see what you owe to subcontractors because you are paying them this month. You might not see what the client still owes you because that sits on a certificate from months ago.
Headcount is smaller. When the business was bigger someone in commercial or finance had time to chase retention. After a restructure the same team must handle invoices, approvals and reporting. Manual retention lists lose the race.
Spreadsheets do not remind. A spreadsheet will hold the number. It will not tell you that a retention release is due 60 days from now.
Retention as a profit and cash tool
Retention is really two reports.
- Retention to receive from clients.
- Retention to release to subcontractors.
If you can see both in one dashboard then you can plan cash. You can speed up claims on the client side and you can schedule releases on the subcontractor side inside contract rules.
Example.
Retention to receive in next 60 days: £74,000
Retention to release in next 60 days: £32,000
Now the business knows it has at least £42,000 of net cash to go after.
Why spreadsheets are not enough
Spreadsheets are good for one project and one person.
They are not good when:
- the valuation date changes
- the defects period changes
- you have 15 or 20 live jobs
- invoices come in through email and not through the sheet
- you need to show management retention across all projects
A spreadsheet cannot link retention back to the contract and warn you if the numbers do not match. A system that already updates the budget when invoices and commitments are approved can do that inside the same workflow.
How Planyard keeps retention visible
Retention is set on the contract.
You set the retention percentage when you upload the contract. Every valuation or progress report on that contract automatically holds back the right amount. No separate sheet.
Retention updates the budget in real time.
Because approved costs are reflected in the budget right away, retention becomes part of the same flow. Project finances stay in one place.
Retention can be released with a proper audit trail.
When the warranty or defect period is over you release retention and it goes to accounting through the integration.
You can see retention in and out across projects.
You can filter for retention that is due from clients and retention you must release to subcontractors. That gives you the 60 day view that people often ask for on calls.
Everything stays tied to the valuation.
Retention is created when the valuation is created. Keeping it in the same system means it cannot be forgotten.
Conclusion
Retention is one of the few places in construction where the money is already yours. You valued the work. You delivered it. The client only held it back because the contract said so. If that retention sits in a forgotten spreadsheet or in someone’s inbox then you are lending money to the client for free.
Put retention in the same place as your valuations, contracts and invoices and make it show up on a single list with dates. That way your team can claim what is owed and release what is due without extra admin.
