Won a big contract but your paperwork is behind? Plan the cash first

Winning a bigger job is the moment many businesses have been working towards. It’s also the moment cash gets tight. Materials need ordering, crew need paying weekly, equipment might need upgrading, and the first payment might be thirty, forty-five or sixty days after the first invoice. Add a tax return that’s still with the accountant, and the bank’s “come back when your financials are done” can feel like a door closing.

This guide is about planning the cash gap properly and funding it with evidence that exists today.

Why do big contracts squeeze cash?

Almost every contract has a timing mismatch. Costs come first; payments come later.

• Mobilisation costs. Materials, hire equipment, travel, site setup.
• Wages. Paid weekly or fortnightly, whatever the client’s payment terms.
• Payment terms. Invoices on 30 or more days, or progress claims assessed and paid on a schedule.
• Retentions. Some contracts hold back part of each payment until completion.
• Tax timing. GST on invoices is reported on your BAS whether or not the client has paid, if you account on an accruals basis. Quarterly BAS fall due on 28 October, 28 February, 28 April and 28 July.

A business that’s comfortable at its old size can find itself short of cash precisely because it’s growing.

How do you map the cash gap?

Before you speak to a lender, sketch the next few months. A simple table is enough.

Month	Cash in (expected)	Cash out (contract)	Cash out (business as usual)	Gap
Month 1	$45,000 (existing work)	$60,000 (materials, mobilisation)	$38,000	−$53,000
Month 2	$50,000 + $0 (first claim not yet paid)	$42,000 (wages, materials)	$38,000	−$30,000
Month 3	$48,000 + $95,000 (first claim)	$40,000	$38,000	+$65,000

Illustrative figures only. This business needs to cover roughly $83,000 over two months before the contract starts paying. That’s the number to take to a lender, along with how and when it comes back.

Mapping it also tells you which product fits. A gap that opens and closes with each progress claim looks like a line of credit. A single large upfront cost looks like a loan.

What evidence works when tax returns are behind?

The evidence for contract funding is mostly forward-looking, which is good news if your paperwork is behind.

Evidence	What it shows
The signed contract	Scope, value and payment schedule
Client details	Who is paying, and their standing
Bank statements (6 to 12 months)	Your turnover and track record with similar work
Recent BAS	Turnover reported to the ATO
Your cash gap table	That you’ve planned the funding need
Evidence of similar past jobs	That you can deliver at this scale
Property details, if available	Security for larger gaps

Our page on contracts and invoices as evidence explains how lenders weigh work in hand. If your tax return is the gap, see business loans without tax returns.

Which finance fits contract work?

Line of credit. Suits recurring gaps: wages between progress claims, materials ahead of each stage. You draw when costs hit and repay when the claim is paid. Unsecured, cash-flow and line-of-credit options for trading businesses are typically $5,000 to $500,000, sized on turnover and bank statements. See low doc lines of credit.

Term loan. Suits one-off purchases the contract requires: a new machine, a vehicle, specialised tools. Repaid on a schedule over a longer period.

Property-secured facility. Suits larger gaps, or where your statements don’t support the amount unsecured. Loans from $20,000 to $5,000,000 by first mortgage, second mortgage or caveat. Often used as a short-term bridge through the contract. See low doc secured business loans.

Many contract businesses end up with a combination: a term loan for equipment and a line of credit for working capital.

What will a lender worry about?

Knowing the concerns lets you address them upfront.

• Can you deliver at this scale? Show similar past work, even if smaller, and who’s doing the work.
• Is the client reliable? An established client with a clear payment process helps.
• What if payments are late? Show a buffer in your cash plan.
• Concentration. If this contract will be most of your income, the lender will think about what happens after it ends.
• Existing obligations. Tax and existing loan repayments still need paying during the contract.

In construction and some other industries, businesses that pay contractors may need to lodge a taxable payments annual report, due 28 August each year. If you’re taking on subcontractors for the job, factor that admin into your planning.

Illustrative example: fit-out contract, returns behind

Illustrative only; not a real business.

A commercial painting company wins a contract to repaint a large retirement village over five months, paid by monthly progress claims on 30-day terms. It’s three times the size of their usual jobs. The company’s latest return is with its tax agent and a couple of months from lodgement.

The directors map a cash gap of about $90,000 over the first two months, mostly wages and a second spray rig. They supply the signed contract and payment schedule, twelve months of bank statements showing regular payments from builders and strata managers, four lodged BAS, and a letter from their tax agent about the return. A lender provides a term loan for the spray rig and a line of credit for wages, both sized on the company’s current turnover.

Before you sign the next big one

A few questions worth asking before the contract is signed:

1. What’s the payment schedule, and are there retentions?
2. What costs hit before the first payment?
3. How many weeks of wages will I carry before I’m paid?
4. What happens to my cash if the first payment is two weeks late?
5. Is my evidence in order: statements, BAS, a note on the tax return?

If you’re not sure where your evidence stands, the substitute checker gives a quick read.

What costs do owners forget to include?

When mapping the gap, these are the costs most often left out, and the ones that turn a manageable plan into a scramble:

• Super and payroll tax. Wages come with super, and larger payrolls may attract state payroll tax.
• Insurance. Bigger contracts can require higher cover or specific policies before you start.
• Hire costs for equipment you don’t own, often charged weekly.
• Extra admin. More invoicing, more claims, possibly a part-time bookkeeper.
• GST on your invoices. On an accruals basis, you may report GST on a claim before the client has paid it.
• Your existing work. Current customers still need servicing, and their costs don’t pause for the new job.

Build these into the table from the start. A lender will be more comfortable with a plan that includes them than one that looks suspiciously lean.

It also helps to decide in advance what you’ll do if the job runs over time or the client disputes a claim. Even a simple fallback, such as a larger line of credit limit than you expect to use or a quieter month for existing customers, shows a lender you’ve thought past the best case. That kind of planning is often what separates a quick approval from a long list of follow-up questions.

Fund the job you’ve won

A signed contract with a clear plan is one of the strongest positions to borrow from, even with returns still in progress. Tell us about the contract and the gap. It takes about a minute, there’s no credit check at the enquiry stage, and your details are handled by one team instead of being handed around lenders.

A real person will look at the contract, your statements and the timing, and suggest the right mix. Please give accurate figures for the contract value, payment terms and your current turnover on the form, so we can match you properly first time. See if you qualify.