Won a big contract? Funding the start-up costs before the first payment

Winning the big one is a great feeling. Then reality arrives: you need to buy materials, put on extra staff, maybe hire or buy equipment, and get insurance sorted, all before you’ve sent a single invoice. And the first payment, once you do invoice, might be 30, 45 or 60 days away.

That’s the start-up gap. It’s one of the most common reasons good businesses need cash fast.

What costs come before the first payment?

Cost	When it’s paid	Notes
Materials and stock	Before or at the start	Often the biggest item
Extra labour	Weekly or fortnightly from day one	Plus super with every pay run
Equipment hire or purchase	At the start	Consider hire for short contracts
Insurance and licences	Before you start	Some contracts require higher cover
Travel and accommodation	Ongoing	For regional or interstate work
Subcontractors	On their terms	Often shorter than your client’s

The gap runs from the first of these costs until the client’s first payment clears, and it often grows for a month or two before payments catch up.

How do you map the gap?

1. List each cost with the date you’ll pay it.
2. List the contract’s payment milestones, with the date you’ll realistically be paid (add a week or two to what the contract says).
3. Add your normal business income and costs alongside.
4. Track the running balance.

The cash gap calculator does this for you and shows the deepest point and how long it lasts. That’s the amount and term to fund.

Contract signed, costs looming? Tell us about the job and a real person will call to talk funding.

How can you shrink it before borrowing?

• Ask for a mobilisation payment or deposit. Many clients will agree, especially if you explain the materials cost.
• Negotiate an early first milestone. A smaller first claim at two weeks rather than a big one at six.
• Line up supplier credit. A trade account with 30-day terms means materials are paid closer to when you’re paid. See our supplier terms guide.
• Hire before you buy. For a one-off contract, hiring equipment keeps cash in the business.

How do you fund the rest?

• Short-term cash loan. Ideal for a defined gap with the contract payments as the exit. See short-term business loans.
• Business cash line. Useful if the contract has many stages and the gap rises and falls.
• Property-backed cash. For larger contracts, with interest prepaid or added so there are no monthly repayments while you’re mobilising. See property-backed cash.

Lenders will want to see the signed contract, the payment schedule and your normal bank statements. A clear margin on the job helps too.

Building a start-up budget the lender will believe

A clear budget helps you as much as the lender. Keep it to one page:

Line	What to include
Contract summary	Client, value, start date, duration
Payment schedule	Each milestone or claim, amount and expected date paid
Upfront costs	Materials, equipment, insurance, licences, mobilisation
Ongoing costs to first payment	Wages and super, subcontractors, travel, hire
Your margin	Expected gross profit on the job
Funding needed	The deepest point of the gap, plus a buffer
Exit	Which payments repay the funding, and when

If the contract is with a large organisation, note their usual payment practice as well as the contract terms. A lender knows that “30 days” on paper and “30 days” in practice can differ, and a realistic schedule builds confidence.

Watch for these risks

• Payment terms longer than your suppliers’. You’ll carry the difference for the whole contract. See slow-paying invoices.
• Retention money held back until completion, which reduces each payment.
• Variations that you fund before they’re approved.
• One client becoming most of your work. If they pay late, everything stalls.

An illustrative example

Illustrative only. A Darwin electrical contractor wins a $480k fit-out contract paid in monthly progress claims on 30-day terms. Materials, two extra electricians and a scissor lift hire cost about $140k before the first claim is paid. The client agrees to a small mobilisation payment. A short-term facility covers the rest and is repaid from the second and third progress claims.

Turn the win into cash flow

You’ve done the hard part by winning the work. Let’s make sure cash doesn’t hold you back. The enquiry takes about a minute and won’t leave a mark on your credit file. We won’t share your details around a long list of lenders. A real person reads about your contract and calls to talk through the start-up costs.

Please be accurate about the contract value, payment terms and your current turnover. It’s what lets us match you to the right funding first time.

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