Quick answer
Winning a contract usually means spending on materials, wages, equipment and bonds well before the first payment. Size the mobilisation gap from the payment schedule, negotiate deposits or progress claims where possible, and bridge what remains with a short-term loan, cash line or property-backed facility, repaid as each claim is paid.
Key points
- Map costs and payments week by week.
- Ask for a deposit or early progress payment.
- Know exactly when the first claim can be made and paid.
- Fund the gap with repayments tied to claims.
- Core problem
- Outlay before first payment
- Unsecured
- Typically $5k – $500k
- With property
- $20k – $5m
- Key tool
- Week-by-week cash plan
Winning a big contract is a great day. The next morning, the invoices begin: materials to order, crews to roster, a bond to post, equipment to hire. Meanwhile the first payment is weeks away, perhaps months. The contract is worth a fortune on paper, and for a while it is a cash drain.
Where the money goes first
Contract start-up tends to need cash in a predictable sequence:
| Phase | Typical costs |
|---|---|
| Before starting | Bonds, insurance, site set-up, permits, deposits to suppliers |
| First weeks | Wages, materials, equipment hire, subcontractors |
| First claim | Time between doing the work and submitting the claim |
| Waiting | The client’s approval and payment terms |
| Retentions | A slice of each payment held back until the end |
Each stage compounds the last. By the time the first payment lands, you may have funded a month or two of the contract yourself.
Sizing the gap
Draw a simple weekly table covering the first twelve to sixteen weeks:
- Costs by week. Be generous. Overruns early on are the norm.
- Payments by week. Use realistic dates, not the contract’s best case. If a claim made on the 25th is paid on the 20th of the following month, plot it there.
- Running balance. Start from your actual bank position, then keep a running total.
- Lowest point. That is the depth of the gap. The weeks spent below your minimum buffer give its length.
The cash gap calculator does the arithmetic from your dates.
Contract won, cash needed? Start the 60-second enquiry.
Shrink the gap before you fund it
You can often cut the gap by negotiating before signing:
- A deposit or mobilisation payment
- An earlier or more frequent progress claim, such as fortnightly instead of monthly
- Shorter payment terms on claims
- Supplier terms matched to the client’s payment dates; see negotiating supplier terms
- Staged material orders rather than buying everything up front
Every week trimmed off the gap saves real money.
Fund what remains
Short-term unsecured money
If the gap is moderate and clear, a short-term loan can cover it, with repayments starting as claims are paid.
A cash line for a rolling contract
On long contracts with monthly claims, a cash line lets you draw for each phase and repay from each payment.
Property-backed funding
For large contracts, equity can fund the early period at scale. See property-backed cash, where structures can keep repayments light until payments arrive.
Retentions and holdbacks
Retention money is earned but unavailable. Under the Construction Contracts Act, retentions on construction contracts must be held on trust. Check the release dates in your contract and treat that cash as a future inflow, not a current one. If your margin is thin, the holdback can be the difference between profit and strain.
Risks to plan for
- Late approval of claims. Build in a delay.
- Variations paid late or disputed. Don’t fund them from the base budget.
- Cost blow-outs from price rises or rework.
- A single customer making up most of your revenue.
- Staff you cannot easily cut if the contract stalls.
Contract terms worth a second look
Before signing, read the payment clauses as carefully as the price. How soon can the first claim be made? Who approves it and how long do they have? Are there set-off rights, caps on variations or liquidated damages that could shrink a payment? Does the client pay a deposit or hold retention, and when is retention released? Ask your lawyer or adviser to review anything unusual. A contract with a generous price but harsh payment mechanics can be worse than a modest one that pays promptly, and the difference shows up directly in the funding you will need.
An illustrative example
Illustrative only. An Auckland electrical contractor wins a $900k commercial fit-out. Materials, labour and equipment for the first eight weeks total about $210k, but the first progress claim will not be paid until week nine. The contractor negotiates a 10% deposit, then borrows $95k short-term to cover the rest. Repayments are timed to the first three claims, and the loan is cleared by week fourteen.
Get ready before you sign
The best time to arrange funding is before the contract is signed, when you can still adjust the payment terms. The enquiry takes about a minute, asking involves no credit check and your details stay with one team. A real person talks it through.
Share the contract value, the payment schedule and your costs so the funding fits the job.
Frequently asked questions
How do I work out how much I will need?
List all costs by week for the early part of the contract, list payments by their realistic arrival dates, and find the lowest running balance. That figure plus a buffer is your gap.
Can I ask a client for an advance?
Yes, and it is common. A deposit or an earlier first progress claim can cut the gap sharply. Put it in the contract.
What if the client pays late?
Build a cushion. Assume the first payment arrives later than the contract says, and make sure your funding can stretch.
Do retentions matter?
Yes. Money held back as retention is cash you have earned but cannot spend. Under the Construction Contracts Act it should be held on trust. Plan around the release date.