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Ask why the money is being held
A retention is an amount held back under the particular arrangement. First establish its purpose and release terms: do not treat every late invoice or disputed charge as the same kind of retained balance.
A narrow federal example shows why wording matters: Federal Acquisition Regulation (FAR) clause 52.232-5 treats retained amounts and final payment in separate paragraphs for covered construction contracts. That clause does not set the terms of your private U.S. customer order.
Make the route to release visible
Prepare a closeout register before the last site visit. These are management questions, not a standard legal checklist for every project.
| Question | Evidence to obtain |
|---|---|
| What balance is held? | Reconciled invoices, payments, credits and the actual retained amount |
| What event releases it? | Contract term and treatment of outstanding work or exceptions |
| Who confirms it? | Named authorised buyer/contract administrator and backup |
| What documents remain? | Required completion, warranty, handover or payment documents |
| What is being signed? | Specialist review of releases, reserved claims or settlement wording where relevant |
The final visit and the receipt need separate dates
Fictional example: a private agreement holds US$5,000 from a US$100,000 project. The parties have chosen those terms; this is not a recommended or statutory 5% rate. Field work finishes on day 60, but an agreed closeout document is supplied on day 75 and the assumed payment falls on day 105.
The business still needs to fund the interval. Identify what caused the delay and whether the closeout task can be completed earlier; do not simply move the receipt to day 60 because the engineer has left site.
Close the evidence gap without losing track of claims
Ask management which items it can resolve, which need buyer action and which require commercial or legal review. A general release may affect unresolved matters, so understand the actual document before signing.
Keep the dated balance and closeout schedule beside the monthly cash model. Cash runway does not decide whether the customer may retain funds or calculate the effect of a claim release.
Scope
- Fictional private-contract illustration plus a specifically scoped federal clause example. No universal retention rate, payment deadline, claim waiver or right to withhold is supplied.
Next step
Use Cash runway for the wider monthly cash position and maintain a separate retained-balance/closeout register showing the actual release evidence, approver and forecast receipt.
Sources & review notes
U.S. Federal Acquisition Regulation / Acquisition.gov
Passage, dates and research notes
regulation · Paragraphs (e), (g) and (h): retainage, bond premiums and final payment
Full clause read; applies only when the relevant federal clause governs the actual contract, subject to version/deviation checks.
Detailed rule records (1)
Paragraphs(e) and(h) separately address retained amounts and final payment, including completion/acceptance and specified payment documents. The actual clause and version must be checked.
FAR 52.232-5: Payments under Fixed-Price Construction ContractsBookmark this guide or mark it as read.
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