How to Record the Release of Retention Receivables
Collecting the withheld retention amount from the client after achieving practical completion and the defects period ending.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash in Bank | Asset (+) | 100,000.00 | - |
| Retention Receivable | Asset (-) | - | 100,000.00 |
💡 Accountant's Note
Retention is typically released in two stages — 50% at practical completion and 50% after the defects liability period. This entry clears the long-held receivable when the client finally pays.
Practitioner & Systems Framework
💻 ERP Architecture
Process the receipt against the specific Retention Receivable sub-account rather than general Trade AR. Ensure the project status in the ERP is updated to 'Warranty Phase' or 'Closed'.
⚠️ Audit Flags
Auditors verify that the cash received matches the long-standing retention balance. They will also look for any unauthorized deductions (liquidated damages or back-charges) the client made before releasing the retention.
📄 Required Documentation
Taking-Over Certificate (TOC), Defects Liability Certificate (DLC), final account statement, and bank deposit confirmation.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.