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Unlocking the Hidden Value: Why Retention Funds Are the Construction Industry’s Untapped Resource
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In the world of construction, where timelines stretch over months and sometimes years, managing cash flow can be a challenge. One of the most overlooked aspects in this arena is the retention fund—a small but significant percentage of the contract value held back by the main contractor. This practice, while common, often leads to large sums of money being left unclaimed, simply because it’s not a priority. But what if we told you that these retention funds could be the hidden gem in your finances?
Understanding Retention
Retention is a percentage, typically between 1.5% and 5% of the contract value, that the main contractor withholds to ensure that any defects in the work can be rectified before the final payment is made. Half of this retention is usually released upon the satisfactory completion of the project, while the remaining 50% is held back until the end of the maintenance period—a time frame that can stretch beyond 12 months after project completion.
The idea behind retention is simple: it provides a financial safety net for the contractor, ensuring that any post-completion issues are resolved before the final payment is made. However, for many in the industry, chasing these funds can be a tedious and time-consuming process, often resulting in the money being forgotten or deprioritised.
The Cost of Forgetting Retention
Retention funds may only represent a small percentage of the total contract value, but when multiplied across several projects, they can add up to a substantial amount. The problem is, many businesses simply don’t have the time or resources to follow up on these payments, especially when the maintenance period can stretch over a year.
This delay in collecting retention can have significant impacts on a company’s cash flow and overall financial health. With construction margins already tight, leaving money on the table can mean the difference between a profitable year and a financial struggle.
A Specialist Approach to Retention Collection
Recognising the challenges that many construction companies face in collecting retention, our team of specialists offers a service designed to take the hassle out of the process. With over 30 years of experience in the construction industry, we understand the intricacies of these contracts and have developed a streamlined approach to ensure that our clients receive what they’re owed.
Our “No Collection, No Fee” model means that we only take a commission—25%—when we successfully recover your funds. This risk-free approach has been a game-changer for many businesses, allowing them to focus on their core operations while we handle the complex task of retention recovery.
Don’t Let Retention Slip Through the Cracks
In an industry where every penny counts, retention is an untapped resource that too many businesses overlook. By actively managing and collecting these funds, construction companies can unlock a valuable source of revenue that can improve cash flow and support ongoing operations.
If you’ve been putting off chasing retention payments, now is the time to act. With the right support, you can ensure that this hidden gem in your finances doesn’t go unclaimed.
For more information on how we can help with retention collection, contact us today.
