Saudi mustakhlasat: current and final claims, and retention money

A mustakhlas is not an invoice. It is a financial statement under a trade contract listing what the contractor has accomplished so far, what the surveyor or consultant has certified as works ready to be paid for, and what is owed now after all adjustments. The contractor measures the works, the consultant checks, and the client attests, and at that point the mustakhlas stands alongside a tax invoice representing the same basis. And when Phase 2 applies, the invoice is the part that must be cleared through Fatoora before it is issued — while the mustakhlas stays in its own commercial certification procedures.

The current mustakhlas is the periodic progress bill — usually monthly — which measures how much the contractor has accomplished in that period alone plus a declared cumulative limit. The final mustakhlas is the complete settlement: it gathers everything done over the project, includes additional works and variation orders and retention amounts released, and closes the account. If there is one final invoice it is a settlement and final closing notice.

The main contractor or client retains the retained amount from each progress claim to guarantee performance. It is usually released in two halves: the first half at primary taking-over of the work (practical completion), and the second half at the end of the defects liability period which is usually 12 months. The exact amount varies by contract, but in contemporary private Saudi construction contracts it usually settles between 5% and 10% — as the tooling firms' guide sequence states. And retention money stays visible in every progress claim as a line "held until release", not as a discount: it is part of your certified work not yet paid.

The advance payment at the end of the day is deducted from your consecutive progress claims, where equal shares are recovered each time (called deductions) until it is exhausted. So your record system must be able to show in each claim what remains of the advance payment unrecovered, because each claim in its cycle that passes through a cleared tax invoice is in fact a certified financial document. And your main contractor's standing tax number must be recorded in your contract file anyway.