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Hi community, in lieu of having a direct feature for this I wanted to highlight the option shared earlier on in this thread (Thanks Peter!) for those it may help.
As mentioned, currently you could enter a separate line on the invoice, with a negative amount for the retention value, and code this to a 'customer retentions' account in the Balance Sheet. You could also add a comment in the Description field, indicating the cumulative retention value.
The Account Transactions Report can then be used to manage the values being carried forward.
Being open, this isn't something we have planned for development at this time, however we'll continue to gather the interest here, and if there's any changes we'll let you know.
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Leonardo Novi
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I've been researching how subcontractors handle retention in Xero, and the workaround that comes up most is a negative line item on the invoice for the retention amount, then a separate invoice when it's released. It works, but it doesn't show what's outstanding across contracts, and the two release dates (practical completion and end of the defects liability period) end up in someone's head or a spreadsheet.
One thing worth flagging: CIS is deducted on what's actually paid, so the retention held back isn't part of the CIS calculation until it's released — and at release, it's the subcontractor's status on that date that applies, not the status back when the work was done. Worth checking your figures if your system nets it the other way round.
I built a free calculator for the split and release dates while working through this: https://retainflow.co.uk — no signup, it just does the maths. Sharing in case it's useful; genuinely interested in hearing whether the negative-line workaround is what people actually use in practice, or if there's something better.