Progress claims and retention: funding the gap

A progress claim is the monthly invoice for work done under a schedule of rates; the client certifies what they accept and pays it 30 to 60 days later; retention of 5% to 10% is held back from every certified claim until practical completion and again until the end of defects. Between doing the work and receiving the money, a contractor carries roughly 10 to 11 weeks of wages, fuel and plant costs on a monthly claim paid 45 days after month end. That is the gap. This guide sets out how it is created, how big it really is, and the 3 facilities that close it.

It is written for WA drilling, earthmoving, civil, crushing and maintenance contractors, and for the subcontractors underneath them, whose payment terms are usually tighter still. We fund this gap for a living, so the guide ends with how that funding is actually assessed.

How a claim becomes cash

The sequence is the same on most WA site contracts. You do the work through the month and keep the daily records, dockets and sign offs that support it. At month end you issue a progress claim against the schedule of rates. The client's superintendent or contracts team assesses it and certifies an amount, which may be less than you claimed if quantities are queried or records are thin. Retention is deducted from the certified figure. The balance is paid on the contract's terms, and 30 days from month end and 45 or 60 days from certification are all common. A claim for August work, certified in mid September and paid on 45 day terms, lands in late October or early November. The wages for that August work went out in August.

Retention: earned, not available

Retention is the client's security for defects and completion, and on a long contract it becomes a large and largely invisible drain. Commonly 5% to 10% of every certified claim is held back, half released at practical completion and the rest at the end of the defects liability period, which is often 12 months later. On a $5,000,000 contract at 5%, that is $250,000 of money you have earned, cannot use, and will not see in full until more than a year after the last claim. Subcontractors carry the same retention from the head contractor, sometimes on top of longer payment terms. Retention is not a payable invoice, so most financiers will not advance against it, which is why it has to be priced into the tender and planned for in the cash flow rather than borrowed against later.

A worked example: the $420,000 monthly claim

The figures are a pattern, not a quote. Take an earthmoving contractor billing $420,000 a month on a 12 month contract, with costs at 70% of revenue and retention at 5%, paid 45 days after month end.

• Weekly cash out: about $68,000 in wages, fuel, plant and suppliers, most of it due weekly.
• First payment lands: month 1 is claimed at the end of week 4, certified around week 6, and paid 45 days after month end, in about week 10 or 11.
• Cash carried before the first dollar: roughly 10 weeks at $68,000, which is about $680,000 of the contractor's own money.
• Retention held from month 1: $21,000, and the same again every month. By month 12 that is $252,000 earned and unavailable.
• Steady state: once payments are flowing, the business is permanently carrying about 10 weeks of costs plus the growing retention balance. Win a second contract and the number doubles.

This is why contractors describe growth as a squeeze. The business is profitable on paper from month 1 and short of cash until month 3, and every new contract restarts the cycle. The gap is created by the payment terms, not by weakness in the business, and the funding has to be sized from the contract for that reason.

The 3 facilities that close the gap

Invoice finance on certified claims. Once a claim is certified, the financier advances most of it, commonly around 80%, within days, and pays the balance less fees when the client settles. In the example above, $336,000 of the first $420,000 claim arrives in week 6 instead of week 11. The facility is secured on the receivables and grows with the contract, so winning more work increases the funding available instead of straining it. Retention and excluded claims stay outside it. This is the tool for a business whose problem is growth, and the detail is on our invoice finance for mining contractors page.

A business overdraft. A revolving limit for the general timing gap, drawn and repaid as claims land. It is simple and it suits a business with a steady claim rhythm, but the limit is set on the business's history and security rather than on the new contract, so it rarely scales with a big win. See business overdraft.

An equipment-backed line. Plant you own outright is capital sitting on site. A line secured against it releases that capital for mobilisation and the claim gap without touching the receivables, and it is often the cleanest answer for retention balances that no invoice financier will touch. The equipment side of this is covered under mining and civil equipment finance.

On most contractor files the answer is 2 of these together, sized from the contract's own payment terms: the claim facility for the flow, and the overdraft or equipment line for the retention and the surprises. That is the structure we build first, and the rest of the contractor picture, from mobilisation to buying out hired gear, sits on our mining services finance page.

What the contract decides before the lender does

Whether a claim can be funded is decided by the contract terms, not by the trading history. Three clauses matter. Assignment: a contract that bars assigning receivables stops most invoice financiers before they start. Set off: broad rights for the client to set off other amounts against your claims reduce what a financier will advance. Retention and defects: the percentage, the release triggers and the defects period set how much of your revenue is locked and for how long. Read those 3 clauses before you sign, or have them read, because a term negotiated at tender is worth far more than one argued about at claim time. Subcontractors should read the head contract's terms as well as their own, because pay when paid mechanics push the whole delay downstream.

Getting claims certified faster and in full

The cheapest working capital is a claim that gets certified quickly at the full figure. That comes from records: daily dockets, plant hours, survey and quantity sign offs, and variation approvals in writing before the work is done rather than after. A claim that matches the schedule of rates and arrives with its evidence is certified in days; a claim that has to be argued sits for weeks, and every week is another week of costs carried. WA's security of payment framework gives contractors a formal path for disputed amounts, but the goal is a claim that does not need it.

Is the gap bigger than it should be?

Our free mining cash flow check takes 2 minutes and covers slow claims and retention alongside the other 6 pressures on contractor cash flow: mobilisation, breakdowns, rental drag, growth, ATO quarters and counterparty concentration. Tick what sounds familiar and we come back with a straight read on what to fix first. If you would rather talk it through, contact us or call 0483 292 005.

Your contractor working capital and claim finance specialist

Rowan Edwards, co-founder. Rowan is a former commercial banker and Credit Representative 579182, and he runs Rockwall's contractor working capital and claim finance work personally. He sizes the facility from the contract's own payment terms and reads the assignment, set off and retention clauses before picking the financier, so the claims that can be funded are funded from certification. More on the team.

Frequently asked questions

General information only, current at 2 September 2026. Claim values, percentages and timelines in this guide are illustrative patterns, not quotes, and contract terms vary. It does not take your circumstances into account and it is not legal or accounting advice. Have your contract terms reviewed by your solicitor before you sign.