How do I do retentions (Construction) in Xero

What are retentions?

QBCC explains it well.

In short, contracts have the right to retain some funds, in case of defects.

This leads to an accounting question, how do we account for this?

Retentions in Xero

Link Advisors has a great article.

Chart of accounts - You need 4 retention accounts:

1. Retentions (Current Asset)
2. Retentions (Current Liability)
3. Retentions (Non-current Asset)
4. Retentions (Non-current Liability)

What report codes do I use

Retention Assets

1. Current = ASS.CUR.REC
2. Non-Current = ASS.NCA.LOA

Retention Liabilities

1. Current = LIA.CUR.PAY
2. Non-Current = LIA.CUR.UDL.2 (May 2025 onward)