Retention and progress claims: the cash you've already earned (and how builders get it back)
Ask a builder where next month’s cash is coming from and most will talk about the next job. Fair enough. Winning work is the visible game. But the biggest cash lever in a building business is rarely new revenue. It’s money already earned that hasn’t made it back yet: work done but not claimed, claims made but not paid, and retention sitting on someone else’s balance sheet with nobody watching the release date.
Three buckets, each with a fix. None of them require winning a single extra dollar of work.
Bucket one: work you’ve done but haven’t claimed
Work in progress (WIP) is cost you’ve already carried, none of it invoiced yet: labour, materials, subbies. Some WIP is unavoidable; that’s the nature of the work. Stale WIP is different. That’s certifiable work sitting unclaimed because claims get raised “when things are quiet”, and on a busy site that’s never.
The fix is a claims cadence. Same person, same day, every cycle the contract allows. Walk every active job, work out what’s certifiable, raise the claim before the month turns. Builders who move from ad-hoc claiming to a fixed fortnightly rhythm routinely pull weeks of cash forward, and the gain repeats every cycle because the rhythm does.
If you’re in Queensland, the Building Industry Fairness (Security of Payment) Act exists precisely to make that rhythm enforceable. Your payment claims carry statutory weight and the response clocks bind the payer. A claim you never raise carries no weight at all.
Bucket two: claims you’ve made that haven’t been paid
Debtor discipline in construction is its own art, because the counterparties are few and the invoices are large. One slow-paying head contractor can be worth more than every other debtor combined. Generic “chase your invoices” advice misses that. The real job is knowing your largest counterparty’s payment behaviour cold, and escalating on a schedule instead of a mood.
Two habits do most of the work. First, age your receivables by counterparty, not just in total. A healthy-looking total can hide one relationship drifting from 30 days to 60, and every unpaid claim is working capital trapped in your business, lent to your client interest-free. Second, decide the escalation ladder in advance: a reminder, then a call, then a director-to-director conversation, then the statutory options. A drifting payer should meet a process, not an improvisation.
Bucket three: retention, earned and usually unwatched
Retention is the most forgettable money in construction. Typically 5–10% of each claim is held until practical completion, with the balance released after the defects period. Individually the amounts are small. Collectively they’re material; a mid-sized builder can have tens or hundreds of thousands of dollars parked across active and completed jobs.
The failure here isn’t dishonesty, it’s amnesia. Nobody tracks which jobs are approaching practical completion, so nobody claims the release the contract already promises. The fix is a retention register: every job, the amount held, the practical completion date (actual or forecast), and the end of the defects period. Review it monthly. When a job reaches practical completion, the release claim goes in that cycle, not when someone remembers.
The common thread
None of this is grand strategy. It’s visibility and rhythm: knowing, every month, what you’re owed across all three buckets, and having a standing routine that turns each one into cash. It slips for a simple reason. It’s nobody’s job. The owner is winning work, the bookkeeper is recording history, and the money already earned sits in the gap between them.
Closing that gap is what a finance function is for, and it doesn’t have to mean headcount. Whether you do it with a spreadsheet and a fixed monthly ritual, or with a board pack that tracks WIP, claims and retention release dates every month, do it. This is the cheapest cash you’ll ever collect, because you’ve already done the work.
Want to see how WIP, claims and retention are tracked in a real monthly board pack? View a sample report. Or if you’d like to talk through your own claims cycle, book a 30-minute discovery call — no obligation.
Frequently asked questions
What is retention in construction contracts?
Retention is a slice of each progress payment, commonly 5–10%, that the client holds back as security until the job reaches practical completion. The balance is typically released after the defects liability period. It's money you've earned sitting on someone else's balance sheet, often for months. If nobody tracks the release dates per contract, it tends to stay there longer than it should.
Why do profitable builders run out of cash?
Because the cash timing in construction is brutal. Wages and suppliers get paid weekly, but money comes in through monthly progress claims, retentions held for months, and clients who pay slowly. Profit on paper says the jobs are good; the bank balance depends on how fast that paper turns into cash. The gap between the two is where builders get into trouble, usually while they're busy.
How often should a builder issue progress claims?
As often as the contract allows, on a fixed rhythm rather than when someone finds time. Every week a certifiable claim sits unissued is a week of interest-free credit extended to your client. A standing claims routine, with the same person raising claims on the same day every cycle, is the single most valuable cash habit most building businesses can adopt.
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