What is retention money?
Retention money is the share of every certified bill — commonly 5 to 10 per cent — that the client holds back as security, releasing it only at completion and after the defects liability period ends.
Also called retention.
Retention money in plain words
It accumulates across every bill on the project. Half is typically released at practical completion and the remainder at the end of the defect liability period, which can be a year or more later.
Retention money: a worked example
Retention accumulated across a completed project.
- Contract value
- ₹86.0 Cr
- Retention rate
- 5%
- Total retained across all bills
- ₹4.30 Cr
- Released at practical completion
- ₹2.15 Cr
- Held through defects liability
- ₹2.15 Cr
- Outstanding 14 months after handover
- ₹2.15 Cr
Real earned revenue, sitting outside the business, with no due date in most finance systems and no owner once the project team has moved on.
Why does retention money matter?
It is real earned revenue sitting outside the business, often the largest single block of trapped cash on a finished project, and it is the one most often forgotten once the site has closed.
Why does retention go unchased?
| Cause | What makes it invisible |
|---|---|
| No due date in the system | It never appears on an ageing report |
| Project team disbanded | Nobody owns the follow-up |
| Release depends on a certificate | The trigger is a document, not a date |
| Sits inside general receivables | It is aged from the invoice, not from completion |
Each of these is a system behaviour rather than a negligence. Aged from the completion certificate instead, retention becomes visible and chaseable.
Where does retention money mislead?
Retention releases are almost never chased automatically, because the project team has moved on and the finance system shows the amount as a receivable with no due date. Ageing it from the completion certificate rather than from the invoice is the only way it surfaces.
What do people get wrong about retention money?
- Ageing it from the invoice date
- It makes retention look permanently overdue and so it gets ignored as noise. Aged from the release trigger, it becomes actionable.
- Forgetting the second half
- The defects liability release is the one most often written off quietly, because it falls due a year or more after anyone was watching.
How does Crestline measure retention money?
Crestline ages retention from the completion certificate rather than the invoice, and carries it as its own line with an owner, so it surfaces after the project team has gone.
The working-capital lens