Introduction to retention guarantee
The retention guarantee is a common practice in the construction and public works sectors in Belgium and Luxembourg. It helps secure completed work by providing for an amount retained from payments to cover any defects or poor workmanship. Understanding how it works is essential for contractors and self-employed workers who want to optimize their financial management. Discover how the invoicing software Flexina, a reference in invoice management for SMEs and self-employed workers, facilitates the management of retention guarantees.
What is a Retention Guarantee?
A retention guarantee consists of retaining a percentage of the total amount of an invoice to guarantee the proper execution of work. This amount is released after a defined period, generally after the provisional or final acceptance of the work.
In Belgium
- Usual percentage: 5% of the work amount.
- Retention duration: until final acceptance, often 12 months after provisional acceptance.
- Sectors concerned: mainly construction and public contracts.
- Legal obligations: Since January 1, 2009, companies must verify the solvency of their subcontractors to avoid social and tax debts.
In Luxembourg
- Usual percentage: between 5% and 10% depending on contracts.
- Retention duration: generally 1 year after work acceptance.
- Bank guarantee possible: The retention guarantee can be replaced by a bank guarantee or one from a mutual guarantee society.
How to manage Retention Guarantee with Flexina?
- Creating invoices with retention guarantee: possibility to automatically integrate a retention percentage on your invoices.
- Adjustment of amount payable: Flexina automatically adjusts the total invoice amount to reflect the retention guarantee.
- Invoice filtering: possibility to easily filter invoices with retention guarantee according to different criteria.
- Reminder automation: automatic sending of reminders to inform customers of remaining amounts due.
Frequently Asked Questions (FAQ) about Retention Guarantee
1. What is a retention guarantee?
A retention guarantee is a common financial mechanism in construction and service provision contracts. It consists of deducting a percentage of the total amount of work or services performed to cover any defects or non-conformities. This sum is generally returned at the end of the guarantee period, subject to the repair of any defects.
2. In which sectors is retention guarantee mandatory or recommended?
Retention guarantee is mainly used in the construction, public works and public procurement sectors. It is often provided for by law or contracts to guarantee the proper execution of work.
3. What is the legal rate for retention guarantee?
In Belgium and Luxembourg, the retention guarantee rate is generally set at 5% of the total contract amount, unless contractual provisions state otherwise. This rate can be adapted according to the clauses provided in the contract.
4. What is the duration of retention guarantee?
The duration of retention guarantee depends on the terms of the contract. Generally, it varies between 1 and 2 years after provisional acceptance of the work.
5. What's the difference between retention guarantee and bank guarantee?
Retention guarantee is an amount deducted directly from payments due to the service provider, while a bank guarantee is a guarantee provided by a bank, allowing the service provider to receive all of their payments. The bank guarantee can replace the retention guarantee if provided for in the contract.
6. How does Flexina manage retention guarantee in its invoices?
Flexina facilitates the management of retention guarantee by automating its calculation and application on invoices. The user can define the retention rate, and Flexina automatically adjusts the invoiced amounts to reflect this deduction.
7. Is it possible to customize retention guarantee rates with Flexina?
Yes, Flexina allows you to customize retention guarantee rates according to the company's needs and contractual requirements. This flexibility ensures management compliant with current regulations.
8. What are the advantages of using Flexina for retention guarantee management?
Flexina offers a simple and effective solution for managing retention guarantees:
- Automatic calculation of retention guarantee.
- Rate customization according to contracts.
- Easy tracking of retained amounts and their restitution.
- Compliance with legal obligations in Belgium and Luxembourg.
9. Flexina and electronic invoicing via the Peppol network
Flexina is compatible with the Peppol network, which is already mandatory for public contracts in Belgium and Luxembourg. From 2026, the use of Peppol will also become mandatory for all B2B transactions in Belgium and highly recommended in Luxembourg. This integration allows sending and receiving secure electronic invoices compliant with European standards, including invoices with retention guarantee. Flexina thus facilitates the management of retention guarantees while complying with new invoicing obligations.
Conclusion
Managing retention guarantee is a major challenge for construction professionals in Belgium and Luxembourg. Thanks to its advanced features, Flexina simplifies this management and allows contractors to focus on their business.
Try Flexina today and optimize your financial management!
