Blog
Retentions and Cashflow: Getting
Paid on Construction Contracts
In construction, retentions can quietly strangle your cashflow.
Here is how to stay on top of them.
By Tom Fisher, Client Manager
In construction, retentions can quietly strangle your cashflow. You have done the work and shown the profit, but a chunk of your cash is sitting in someone else account.
What retentions are
A percentage of each payment held back by the customer until the job is finished and any defects period has passed. Standard practice, but easy to lose sight of.
How to stay on top of them
- ✓ Track every retention as a separate debtor, not lost in the general ledger
- ✓ Diarise the release dates and actually chase them
- ✓ Factor them into your cashflow forecast so you are not caught short
- ✓ Price for them in the first place
Add in applications for payment, staged billing and the VAT reverse charge, and construction cashflow needs proper handling. We do exactly that for our trade and contractor clients.
Tom Fisher · Client Manager
Specialist at Abbeygate Accountancy. Book a call or grab a coffee to talk through your numbers.
xeroPlatinum Partner
Let's have a proper conversation about your business.
No suits, no jargon, just straight-talking advice. Book a free, no-obligation call and see the Abbeygate difference.