Definition
Retention is a sum withheld from contract payments by the client to provide assurance against defects. Common in commercial fit-out and construction. Typically 5–10% of contract value, released in two stages: a portion at practical completion, the remainder after the defect liability period (often 6–12 months).
Example
Worked exampleA R 1.2m commercial fit-out with 10% retention holds back R 120,000. R 60,000 releases at practical completion; R 60,000 releases six months later if no defects are raised.
Why it matters
Untracked retention sits in the client's account until someone remembers to ask for it — sometimes never. Tracked retention with a release schedule converts what should be working capital back into cash on time.