Quick answer: Construction working capital should be sized around the peak gap between material and subcontractor payments and certified customer receipts. Use deposits and progress claims lawfully, negotiate supplier terms and establish a revolving buffer before the gap becomes a crisis. Do not fund a loss-making fixed-price job merely because credit is available.
Questions business owners commonly ask
- I need $50k to reach the next build stage before I can invoice — is that normal working capital?
- How do I fund materials when the allowed deposit does not cover the upfront purchase?
- What happens when the customer's bank delays a progress payment and my trades are waiting?
Build a job-by-job cash curve
For each active project, map deposit, materials, subcontractor invoices, progress-claim dates, certification and expected receipt dates. Aggregate all projects to find the true peak cash requirement.
Payment terms are part of finance
Supplier accounts and lawful staged claims can reduce external borrowing. In NSW, Security of Payment legislation gives statutory progress-payment rights for construction work, but contractual certification and disputes can still affect timing.
Use revolving capital for repeating gaps
A line of credit or suitable receivables/progress-claim structure can make more sense than serial short-term term loans if the same gap repeats across projects.
Watch fixed-price margin erosion
Labour and material overruns can turn a timing gap into a loss. Finance can bridge timing; it cannot recreate margin that has disappeared.
Related guides
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General information only. Business lending policy, security, guarantees, pricing, covenants and documentation vary by lender and transaction. This is not legal, tax or accounting advice.
Frequently asked questions
Can progress claims support finance?
They can support the credit story; exact lender products and eligibility vary.
Should I borrow the full contract value?
No; size finance to the peak cash deficit.
Can supplier terms help?
Yes.
What if the client's bank delays payment?
Build a timing buffer rather than assuming immediate settlement.
What if the job is losing money?
Fix the commercial problem; more debt may worsen it.
Sources and verification
Property development and construction finance
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