Contract and tender funding

The contract cash gap

You’ve won the tender. Now you have to deliver. Before the first claim is paid, you might need to hire staff, buy materials, add vehicles or machinery, pay subcontractors and cover insurance. Then the client pays on 30 or 45-day terms, perhaps holding back retentions. The bigger the contract relative to your business, the bigger the gap.

Building a contract funding stack

Cost	Funding option
Equipment and vehicles	Equipment finance
Wages until first payment	Payroll funding or line of credit
Materials	Short-term loan or supplier terms
Invoices once issued	Invoice finance
Goods for supply contracts	Purchase order finance

What lenders want to see

• The signed contract or letter of award.
• The client and their payment terms.
• A mobilisation budget and cash flow forecast.
• Your track record on similar work.
• Existing commitments and capacity.

Watch the fine print

Check payment terms, retention clauses, liquidated damages and variation processes. These all affect cash flow. Your solicitor can help spot risks before you sign. Tradespeople can find more on tradie business loans.

Won the work? Tell us about it.

An illustrative example

A commercial cleaning company wins a contract for several schools. New staff, equipment and a van are needed before the first monthly invoice. Equipment finance covers the van and machines; invoice finance bridges the payment terms once billing starts. (Illustrative only.)

What else is contract and tender funding called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as Contract finance, Mobilisation funding and Tender finance. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the growth and restructuring shelf. It’s most often used for buying, starting or growing a business, cash flow and working capital, and the security usually involved is whatever suits the deal, from nothing at all to property. It is one of the quicker entries to put in place when the paperwork is ready. Its closest neighbours are:

• Tradie business loans — Tools, utes, materials and the wait for progress claims to be paid.
• Business acquisition loans — Fund the purchase of an existing business, its goodwill and its stock.
• Franchise finance — Buy into a franchise system, fund the fit-out and get through the first months.
• Fit-out finance — Kitchens, counters, joinery and the build-out of new premises.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Starting with the product instead of the purpose. Decide exactly what the money must achieve, then choose the structure that fits it.
• Not comparing secured and unsecured options. The same need can often be met either way; the right answer depends on amount, credit and timing.
• Under-estimating the total cost. Ask for the full amount repayable in dollars, including every fee, before you compare offers.
• Applying everywhere at once. Multiple applications can leave a trail of credit enquiries. One well-prepared enquiry is better.
• Leaving it until the last minute. Facilities are easier to arrange while trading is strong, not in the middle of a crunch.

What should I ask before signing up for contract and tender funding?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. Which structures did you consider for me? A good specialist explains why one option beats the others for your situation.
2. What’s the total cost in dollars? Compare like with like across secured and unsecured offers.
3. What security or guarantees are needed? Know exactly what’s on the line before you sign.
4. How are repayments timed? Match frequency to how money comes into your business.
5. What happens if things change? Ask about early repayment, top-ups and hardship options.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Deliver the contract you’ve won

If a new contract is bigger than your cash, the right funding mix lets you deliver without strain. No credit check is involved in enquiring, and one specialist handles it personally.

Please tell us the contract value, client, terms and mobilisation costs. Accurate details mean the right structure. Start your enquiry.