We do the same thing and have the same issue.  The problem with this solution is the customer does not owe the retention amount we are holding back until we invoice it. If we bill it as a positive number then it will look like they are past due when they aren't.

we have retention as other current asset (named: retention receivables) and bill it the same

invoice  amt : $10000

retention held: $-1000 retention

owed $9000

When we bill the retention we have an item called: last payment retention that we bill on. It is an other charge type with account going to retention receivables account (other current asset)

Our P&L is not correct either and our balance sheet shows a negative in the AR and a balance in the attention receivables asset.

Not sure if this is correct Watch this video

https://www.youtube.com/watch?v=g61Gix790d4&list=LL&index=1&t=528s