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Retention isn’t lost. It’s just untracked.

Every credit professional knows the discipline: run the aged trial balance, chase the 60-day column, escalate the 90s. It works. It’s why overdue reporting exists.

Now look at the 90-plus column on a construction client’s ledger. A meaningful share of what’s sitting there isn’t a delinquent debtor at all. It’s retention, and it will still be sitting there in twelve months.

Head contractors withhold roughly 5% of contract value from progress payments. Half is released at practical completion, the other half at the end of the defects liability period, typically a year later. How that appears in the books depends entirely on how the subcontractor invoiced it, and neither version ends well.

Where the full 100% is invoiced and 95% is paid, the shortfall stays in accounts receivable and ages straight through to 90-plus, where it sits for a year or more. It’s perfectly visible. It just isn’t treated as collectable. Everyone in the business knows “that’s only retention”, so it comes off the call list, quietly inflates debtor days, and makes every ageing report harder to read.

Where the subcontractor invoices 95% net, it’s worse. The 5% never enters the ledger at all. No invoice, no receivable, no general ledger entry. Just a spreadsheet, a job management system, or someone’s memory. Revenue is understated and the balance sheet doesn’t carry the asset.

One version is misread. The other is invisible. Neither gets claimed on time.

NCI ran the numbers across a full financial year of client reports: 889 reports, covering 4,296 debtors, carrying $164.4 million in outstanding retentions. And that only counts retention clients could see well enough to report. Across Australia and New Zealand, an estimated $22 billion is in circulation at any moment. The average subcontractor turning over $600,000 to $1 million is owed around $50,000 of it, often more than their annual profit.

Most of that money is not lost to a dispute. It’s lost to a diary. And on much of it, the GST was paid years ago, long before the cash.

The 5% that was never invoiced

The uninvoiced version deserves its own warning, because it fails in a way the other doesn’t: when the release date finally arrives, there is nothing in the accounting system to reconcile a claim against. The reconciliation has to start from a spreadsheet that may be years old and maintained by someone who has since left.

So, how do you track retentions?

Retention Track was built to answer exactly that. It connects to Xero, MYOB and Fergus to find the invoices where retention was withheld and correct the accounting treatment. For contracts billed net, it brings the uninvoiced 5% off the spreadsheet and onto the ledger as a tracked retention debtor, where it can be reconciled and claimed. Everything is grouped by contract, with practical completion and defects liability dates on a single dashboard. When a date arrives, Retention Track generates the payment claim in line with the legislation of the relevant state or country, then walks the user through payment schedules and, if needed, an adjudication notice.

Benefits of Retention Track include:

• Better cashflow visibility
• Accurate financial reporting
• Correct GST timing on retentions
• Reduced compliance risk
• More predictable recovery

The consistent feedback from businesses that connect their accounts is how much they find: retention balances they had stopped tracking, sometimes on jobs finished years ago.

Setup takes about three minutes. Contracts cost $20 + GST each for the life of the contract, with no subscription. The first three are free.

Retention Track is a certified app in the Xero App Store, is featured on New Zealand’s Ministry of Business, Innovation and Employment website as a retention money resource, and works across Australia, New Zealand and the United Kingdom.

If you have retentions outstanding, or new projects where they’ll be withheld, don’t wait for the release dates to find you. Contact James Coulson directly on 0400 736 736 or [email protected], visit retentiontrack.com, or speak to your NCI Client Service Manager.