The Importance Of Accurate Retention Tracking For All Builders

Retention is the percentage of progress payments that are withheld by a client to prevent breaches of contract and to ensure project completion and quality satisfaction.

This is how retention works: First off, the percentage and terms of payment should be indicated in the construction contract. Afterward, the client will retain the remaining payment until the project end date. Finally, when the project is finished, the remaining payment will be dispensed by the client to the builder.

Although agreeing to retention withholding can increase the trust of your clients in your commitment to providing excellent services and accountability, it exposes you to financial risks.

In fact, according to The West Australian, fair payment has been an issue in the building industry for decades already, including slow and non-release retention monies.


Transparency is one of the most important factors in every transaction. It is mutually beneficial to both parties because clients want to pay the right amount, and builders want to receive the right amount as well.

Although transparency is a business buzzword and encountering dishonest clients is not likely, it’s not enough reason to be complacent because there are still some who might take advantage of the situation if you’re not keeping a close eye on your finances.  

Using an accurate retention tracking system will enable you to spot any fraudulent act done by the client.

Prevention of cash flow problems

Since most construction workers are paid on an hourly basis, and you have other employees and office bills (whether it’s mortgage, rent, office equipment, or electric and water bills) to pay as well, you need a regular cash flow to sustain your business.

One of your financial sources are retentions, that is why you need to avoid delays in receving a retention payment. Otherwise, your budget might fall short and leave you with no choice but to borrow money for the sake of paying the bills (which might get you stuck in a pile of debt—it’s a domino effect.).

Through accurate retention tracking, you will be able to monitor your retention schedule and remind your client about it. You can also monitor it along with your bills payment schedule and check whether it matches. Knowing it beforehand will help you balance your finances through cost-cutting and other money saving practices in case the retention schedule falls behind your bills payment schedule.

Smooth transaction

By using an accurate retention tracking system, you can prevent future transaction problems that may lead to arguments and lawsuits by balancing the financial situation.

If before, your client has the upper hand because he/she has your money, now, the power is distributed because you already have the ability to know what happens to your money and make sure that they will follow the terms of payment indicated in the contract.

Just remember to remind your clients (that you’re tracking the retention) in a nice way (not in an “I’m-keeping-an-eye-on-you!” kind of way.).

BizPrac software for builders comprises of different functions for effective construction management including builder retention management.

Contact us today to learn more about Bizprac and our construction management software,