Retention money: tracking release so you don't forget it
How to keep a retention register across work orders, tie release to the defect liability period, and claim retention on the day it falls due.
- Published
- 15 Oct 2026
- Reading time
- 4 min
- Topic
- Getting paid
- Written by
- The Tatha Vastu billing team
Retention is money you have earned and the client has kept. A share of each RA bill is held back as security for the quality of the work, and released after the defect liability period ends. On paper it is a receivable. In practice, retention on closed sites is one of the most commonly forgotten amounts in a contractor's books.
The reason is timing. Retention is released one to several years after the work, often after the billing engineer and site team have moved on. Unless someone tracks it with dates, nobody applies for release, and the money sits with the client.
How retention works on an RA bill
The contract sets the retention or security deposit terms: the percentage deducted from each bill, any cap on the total, and when and how it is released. There is no standard percentage; read yours. On RA Bill No. 7 for a ward office building, the work order is configured at 5% retention. The value of work done this bill is ₹20,84,879, so retention is 5% of that, ₹1,04,243.95, rounded to ₹1,04,244.
Some contracts hold the deduction as a security deposit with no separate performance guarantee; others ask for both. Some allow the contractor to replace cash retention with a bank guarantee. These details decide what you can claim, and when.
The retention register
A retention register is one row per work order, kept up to date with every bill. It answers three questions at a glance: how much is held, when can it be released, and has anyone applied.
| Column | What goes in it |
|---|---|
| Work order | Client, work, contract reference |
| Terms | Percentage per bill, cap, release stages, bank guarantee option |
| Held to date | Total retention deducted across all bills |
| Completion date | Date on the completion certificate |
| Defect liability end | Completion date plus the contract's defect liability period |
| Release due | The date you can apply for each stage of release |
| Application | Date applied and the letter reference |
| Received | Date and amount received |
A worked example
A work order is configured at 5% retention per bill. The value certified across all bills to date is ₹82,52,000. Retention held is 5% of ₹82,52,000, which is ₹4,12,600. The contract releases retention after the defect liability period ends, against a written application and a certificate that no defects are pending.
What does it cost to hold it? At an 11% cost of funds, ₹4,12,600 held for a year costs ₹45,386 in interest (₹4,12,600 x 11%). Every month the release is delayed by a forgotten application adds about ₹3,782 more. Across ten closed work orders, that becomes a real number.
What delays release
- Nobody applies. Clients rarely release retention without a written request.
- Defects not closed. A defect reported in the last month of the liability period holds the whole amount until it is rectified and recorded as closed.
- No completion certificate. Without a dated completion certificate, the defect liability end date is open to argument.
- Final bill not settled. Some clients will not release retention until the final bill is passed, so a slow final bill delays both.
- Wrong totals. If your figure of retention held does not match the client's, the release waits for reconciliation.
Defects during the liability period
Keep a defects log for each closed work order: the date each defect was reported, the date it was attended to, and the client's confirmation that it was closed. A photo before and after is the best confirmation. When you apply for release, attach the log. An application that already answers "are any defects pending?" moves faster.
Bank guarantees in place of retention
Where your contract allows retention to be released against a bank guarantee, compare the guarantee's cost with the cost of the cash held. A guarantee uses your bank limit and carries a commission; cash retention uses working capital. The right choice depends on your limits and your cost of funds. Either way, add guarantee expiry dates to the register: a guarantee that lapses before the liability period ends will be invoked or must be extended.
Retention you hold from subcontractors
Most contractors also sit on the other side of retention. You deduct it from subcontractor and labour contractor bills for the same reason your client deducts it from yours. Keep those amounts in the same register, linked to the main work order, so you can see both sides of each contract in one row.
The two should move together. If your subcontract releases retention on a date tied to your own release, a forgotten application to your client also holds your subcontractor's money, and that relationship pays for it on the next site. If the subcontract releases earlier, you are funding the gap from working capital, and you should know how large it is.
A quarterly routine
- Update held-to-date for every live work order from the last certified bill.
- List every work order whose release date falls in the next 90 days.
- Check that defects on those work orders are closed, with confirmation.
- Prepare the application letter with the retention computation and the defects log.
- Follow up on applications older than 30 days with no payment.
The retention release letter template gives you the letter, and the retention calculator works out per-bill and cumulative retention with a cap.
How Tatha Vastu tracks retention
In Tatha Vastu, retention terms are set once per work order: percentage, cap and release stages. Each bill deducts it the same way, and the held-to-date figure is kept beside the client's certified figure. The release schedule is tied to each work order's defect liability end date, and the work order list shows what falls due next, including on closed work orders kept in the read-only archive.