Definition
What it means
Retention (also called retentions or holdback) is a percentage of each progress payment the customer holds back until the work is fully complete and any defects-liability period has expired. The retention sits as a security against incomplete or defective work. It is standard practice on commercial construction and increasingly common on larger residential builds.
How retention works
Typical retention is 5 to 10 percent of each invoice value, held until practical completion. After completion, half of the retention is released. The other half is released at the end of the defects-liability period (usually 6 to 12 months). On a $100,000 job with 10 percent retention, $10,000 is held back over the life of the project.
How to manage retention on your quote
If the customer is going to apply retention, state it explicitly on the quote so there are no surprises. State the percentage, when each half is released, and the defects-liability period. Build the retention into your cash-flow plan because the final 5 percent can arrive over a year after the work is done.
How QuoteGenio handles retention
Add a retention line to commercial invoices and the system tracks the held-back amount across the project. Reports show what is still held and when it is due for release.
Related terms
Other glossary entries you might want next
Closely related terms in the trades-finance vocabulary, with the same plain-English treatment.
Progress Payment
A staged invoice issued during a longer project, billed against milestones or a percentage-complete basis rather than waiting for the entire job to finish.
Deposit
An upfront payment the customer makes on acceptance, typically 20-50 percent. Covers your material outlay and commits the customer to the booking.
Scope of Work
A precise list of what the quote covers and what it does not. Protects you from scope creep and protects the customer from surprise charges.
Put it to work
Templates that use this concept
Free quote and invoice templates where this term naturally appears.
Testimonials
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Electrician · New Delhi
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Articles that go deeper on this topic
Long-form posts from the QuoteGenio blog that put this concept in real-world context.
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