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🏗️ Worked example

A contracting company: advances & retention

Follow a construction job through FinSanad the way contractors actually bill — a mobilisation advance at the start, progress (interim) invoices as work is certified, and retention held back on each one until the job is signed off. You'll see how to invoice, hold and release retention, and recover the advance.

📖 The story

Al Bina Contracting LLC wins a AED 500,000 office fit-out for Skyline Developments. The client pays a 10% advance to get started, is billed in stages as the work is certified, keeps 5% retention back from each bill as a safety net, and releases that retention once the defects period ends. FinSanad tracks every piece so nothing is lost and your books always balance.

01Three things that make contracting different

TermWhat it means, in plain words
AdvanceMoney the client pays up front to help you mobilise. It's not income yet — you "earn it back" as you do the work, so it starts as something you owe the client.
Progress / interim invoiceYou don't bill the whole contract at once — you bill for the work certified so far, stage by stage.
RetentionA slice of every invoice (say 5%) the client holds back as a guarantee you'll fix any snags. It's still your money — just parked — and you collect it at the end.
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Where these liveFinSanad handles all three in the Invoicing → 🏗 Advances & Retention card. It automatically uses two special accounts: Retention Receivable (money the client is holding back) and Customer Advances (money you owe until you've earned it). You don't create these — they appear when you first use the feature.

02The contract at a glance

TermValue
Contract valueAED 500,000 + 5% VAT
Mobilisation advance10% = AED 50,000, recovered against invoices
Retention5% held from each invoice, released after sign-off
This walkthrough billsInterim invoice #1 — AED 200,000 of work certified

03Step 1 — Set up the customer

  1. In Parties, add Skyline Developments as a Customer (with their TRN and payment terms).
  2. You don't need stock items for a contract — on the invoice you'll use description lines such as "Fit-out works — Interim Certificate 1". (If you prefer, create a Service item like "Contract works" to reuse.)

04Step 2 — Receive the mobilisation advance

Before work starts, the client pays AED 50,000 up front.

  1. Open Invoicing → 🏗 Advances & Retention and use Receive Advance.
  2. Pick the customer, enter Amount 50000, choose the bank account it landed in, and a reference.
  3. Save. FinSanad records the cash in and books it as money you owe the client (Customer Advances) — not income yet.
🇦🇪
VAT on advancesUnder UAE VAT, tax can fall due when you receive an advance. The Advances tool records the cash movement; if VAT is due on the advance, raise a tax invoice for it separately. Check with your accountant on the timing.

05Step 3 — Raise interim invoice #1

The engineer certifies AED 200,000 of work. Bill it as a normal sales invoice — VAT is charged on the full certified amount.

  1. In Invoicing → ➕ New Document, Document Type = Sales Invoice, customer = Skyline Developments.
  2. Add a line: Fit-out works — Interim Certificate 1, Qty 1, Price 200000, VAT% 5.
  3. Create & Post.
Interim invoice #1AED
Work certified (net)200,000.00
VAT (5%)10,000.00
Invoice total (client owes)210,000.00

06Step 4 — Hold the retention

The client keeps back 5% of the certified work = AED 10,000. This doesn't reduce the invoice or the VAT — it just moves that slice into the "held back" bucket so you know to collect it later.

  1. In 🏗 Advances & Retention, use Hold Retention.
  2. Pick the customer, (optionally link invoice #1), enter Amount 10000, add a reference.
  3. Save. FinSanad moves AED 10,000 from the normal receivable into Retention Receivable.

07Step 5 — Recover part of the advance

This invoice is 40% of the contract, so recover 40% of the advance = AED 20,000 against it — reducing what the client needs to pay now and shrinking the advance you owe.

  1. In 🏗 Advances & Retention, find the advance and click Apply.
  2. Enter Amount 20000 and save. It reduces the client's balance and the advance liability together.

08Step 6 — Collect the net, and see where everything sits

After holding retention and recovering the advance, here's what the client actually pays now, and what's still outstanding:

Interim certificate #1 — the mathsAED
Invoice total210,000.00
Less: retention held (5%)−10,000.00
Less: advance recovered−20,000.00
Payable by the client now180,000.00
  1. When the client pays, open invoice #1 in Documents and click 💰 Receive for 180000.

Your books now show these balances for this client:

BucketAEDMeaning
Cash received so far230,000.0050,000 advance + 180,000 on the invoice
Retention Receivable10,000.00Held back — you collect it at the end
Customer Advances (still owed)30,000.0050,000 advance − 20,000 recovered
Revenue recognised200,000.00The certified work
VAT Payable10,000.00Ready for your next VAT return

09Step 7 — Release the retention at the end

When the defects period ends and the job is signed off, the client releases the retention.

  1. In 🏗 Advances & Retention, find the retention row and click Release, entering the amount (10000).
  2. FinSanad moves it back from Retention Receivable to a normal receivable — it's collectible again.
  3. When the client pays, open the client and record the 💰 Receive of AED 10,000.
✅
Nothing was ever lostRetention is not a discount — it's your money held on a timer. Holding it parks it; releasing it hands it back to be collected. Across the job you recognised the full AED 200,000 of revenue and will collect every dirham.

10The whole flow in one line

💰 Receive advance→ 🧾 Interim invoice→ 🏗 Hold retention→ ↩ Recover advance→ 💰 Collect net→ 🔓 Release retention

Repeat the middle steps (interim invoice → hold retention → recover advance → collect) for each progress claim until the contract is fully billed, then release the accumulated retention at the end.

11Things to watch

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VAT is on the full certified amountHolding retention only moves money between receivable buckets — it does not reduce the invoice or the VAT. You charge VAT on the whole AED 200,000, even though the client pays part of it later.
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The advance is a liability until earnedAn advance sits as money you owe the client until you recover it against invoices. Recover it as you certify work, so it doesn't linger on your balance sheet.
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Keep an eye on the balancesUse Reports (or the Report Builder) to watch Retention Receivable and Customer Advances so you always know how much is held back and how much advance is left to recover.
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