How to Invoice for Retention on Build Jobs

Retention is the slice of your money the client holds back at the end of a build. Here is how to invoice for it properly so you actually get paid.

Retention is the percentage of your contract value the client holds back until the job is fully signed off. It is normal on bigger build jobs, but it is also where a lot of small contractors lose money. The work gets done, the defects period passes, and somehow nobody remembers that final invoice.

If you are running a building business or doing fit-out work, you need a clear way to invoice retention or it will quietly eat your margin. This guide walks through how it works, when to bill it, and how to make sure the money actually lands in your account.

What retention actually is

Retention is usually 5% or 10% of each progress claim, withheld by the client or main contractor as security. Half of it is typically released at practical completion. The other half is released after the defects liability period, which is often 6 or 12 months.

So on a $ 80,000 job with 10% retention, the client holds back $ 8,000 across the life of the project. $ 4,000 comes back when the work is signed off, and $ 4,000 comes back six months later once you have fixed any snags.

If you handle this work, QuoteGenio supports free quotes and invoices for builders, so your retention amounts stay visible on every progress claim and you and the client are always looking at the same numbers.

Show retention on every progress invoice

Do not hide the retention deduction in the small print. Put it on the face of the invoice as a separate line so the client can see what they are holding and what they owe right now.

A clean progress invoice has four lines at the bottom:

• Work completed this claim
• Less retention (5% or 10%)
• Subtotal payable now
• Cumulative retention held to date

That last line is the one most tradies forget. It saves you a fight later because the client cannot pretend the running total is news to them.

When to issue the retention release invoice

There are usually two retention release invoices on a build job. The first goes out at practical completion. The second goes out at the end of the defects liability period.

First release at practical completion

Once the client signs off that the work is practically complete, you invoice for the first half of the retention. Reference the original contract, the date of practical completion, and the certificate number if there is one.

Final release after defects period

Diary the end of the defects liability period the day the job finishes. When that date hits, send the final retention invoice. Do not wait for the client to ask. Most clients will quite happily forget about your money if you let them.

If you also do trade work that ties into builds, the same rules apply across the wider construction and building trades running site work under a main contractor.

Sample retention invoice wording

Keep the wording simple and reference the contract. Something like:

"Release of first moiety of retention held under Contract 2025-114, Lot 7 Riverside Estate. Practical completion certified 14 February 2026. Amount due: $ 4,000."

For the final release: "Release of final moiety of retention under Contract 2025-114. Defects liability period expired 14 August 2026. Amount due: $ 4,000."

Attach the practical completion certificate or any defects sign-off to the email. It removes the excuse that the client needs to go check something before paying.

Common mistakes that cost you

• Not tracking cumulative retention across progress claims, so the final number is a surprise
• Forgetting to diary the defects period end date
• Including retention release in a regular progress claim where it gets buried
• Not chasing the release invoice when it goes overdue, because it feels awkward to chase old money
• Agreeing to retention on small jobs where it does not belong, like a $ 6,000 bathroom

Retention belongs on contracts of decent size where the client genuinely needs security. On smaller jobs, push back. A deposit and milestone payments do the same job without locking up your cash for a year.

How to track retention without losing your mind

Spreadsheet tracking works for one or two jobs. Once you have three or more builds running, you need software that totals retention per project automatically. Otherwise the math gets ugly fast.

Good quoting and invoicing tools show held retention as a separate balance per client. You can set the structure up once with a set of free quote templates and reuse it on every build.

At a minimum, keep a one-page schedule per project with the contract value, retention percentage, every progress claim, retention deducted each time, the running total held, and the two release dates. Update it the same day every claim goes out.

The bottom line

Retention is not a tip. It is your money sitting in someone else's account. Invoice it like you would any other amount owed: clearly, on time, with the paperwork attached, and follow up the day it goes overdue. Do that and the back end of every build pays out the way it should.

Want to put this into practice? Run your retention tracking through a free quote calculator and QuoteGenio's mobile-first quoting workflow. No spreadsheets, no after-hours admin.