The customer says the unpaid half is retention but the invoice says otherwise

The explanation arrives after the reduced payment

A hypothetical subcontractor invoices for completed work and receives half the amount. When asked about the balance, the customer says it is retention. The subcontractor does not remember agreeing to that amount. Before accepting or rejecting the explanation, locate the contract and payment documents and obtain advice on what the arrangement actually permits. A label on a remittance does not resolve the issue.

Identify the contractual basis being asserted

Ask the customer which provision and calculation they rely on. Collect the signed terms, payment schedules and any agreed changes. Check whether the withheld amount relates to retention, an alleged defect, a disputed claim or another adjustment. These may raise different questions. Do not combine them under a single heading just because the customer used the word retention.

Check the payment conditions

Business.gov.au recommends reviewing contractual payment terms when following up unpaid money. For construction work, obtain advice suited to the contract and jurisdiction where required. This article does not establish a right to withhold or a universal release date. The amount, conditions and any applicable payment process need assessment against the actual documents and circumstances.

Source: business.gov.au: What to do when you haven't been paid

Reconcile the figures without conceding the label

In the hypothetical example, show the invoice amount, receipt and withheld balance accurately. Record the customer's explanation separately from the business's position. Ask the accountant how to keep the ledger clear while the issue is reviewed. Do not delete the unpaid amount or record it as an agreed retention merely to match the customer's statement if that treatment remains disputed.

Resolve the specific disagreement

If the documents support retention, clarify the relevant conditions and the information needed to track them. If the basis is unclear or contested, ask the adviser what response and timing are appropriate. Avoid waiting indefinitely for a supposed release event that nobody has identified. Equally, do not demand immediate payment on an assumption that all retention arrangements are invalid.

Track the agreed or advised position

Keep the evidence, correspondence and any verified next step together. Update the cash forecast with realistic assumptions and make unresolved conditions visible. CRP can help organise the commercial account for review. The purpose is to establish what the unpaid balance represents before selecting the recovery approach, rather than allowing a late label to replace the original agreement.