In this article
- The gap between winning the work and getting paid for it
- Why the mobilisation-to-payment gap catches operators out
- Sizing a working-capital buffer
- A short checklist before you commit
- Where finance structure fits in
- Frequently asked questions
The gap between winning the work and getting paid for it
Winning a job or a package feels like the finish line. Commercially, it's closer to the start. Between signing and being paid, an operator may need to carry crew wages, fuel, insurance, permits, transport and — if new or additional machinery is involved — finance repayments, all before the first progress claim is submitted, approved and paid.
That gap is where working capital does its job — see Managing Cashflow: How to Structure Business and Equipment Loans Around the Way Your Business Earns for the full definition of working capital and how it relates to cashflow. Run it too thin heading into a mobilisation and a genuinely good job can still create a genuinely bad month for the business's cashflow.
Why the mobilisation-to-payment gap catches operators out
The gap is rarely a single number. It's a combination of:
- Payment terms. Claim timing and payment terms vary by contract, industry and jurisdiction — some arrangements pay well after a progress claim is submitted, others sooner. Model the actual written terms for the job in front of you rather than assuming a standard timeframe.
- Claim cycles. Depending on the written contract, a first claim may only be submitted after a defined milestone is completed. Model the actual milestone, approval process and payment terms for the job in front of you rather than assuming a standard claim cycle.
- Upfront costs. Transport, establishment, permits, insurance and any new machinery deposit can fall before the first payment arrives.
- Follow-on assumptions. It's easy to assume the next stage or package will keep the same crew and machinery busy. Some projects in this month's update — the Toowoomba–Warwick Pipeline is a clear example, where Stage 1 has been awarded but Stage 2 remains a future decision — make the point directly: an award for one stage is not a guarantee of the stage that follows it.
Sizing a working-capital buffer
There's no universal number, but a workable starting method is:
Add up the costs you'll carry between mobilisation and the date the first payment is realistically expected to clear — not the date it's due, the date it actually lands.
Add a margin for a slower-than-expected claim cycle or a partial payment.
Hold that total, plus a further margin, separate from funds earmarked for wages, fuel and other ongoing operating costs.
Recheck the number if the scope, crew size or machinery commitment changes.
This is the same discipline behind TMF's repayment buffer concept, covered in full in Servicing a Loan: How to Test Whether Repayments Fit the Way Your Business Earns.
A short checklist before you commit
- What are the confirmed payment terms and claim cycle for this job — in writing, not assumed?
- What will you have spent, in cash, before the first payment is realistically expected to land?
- Is any of that spend financed, and does the repayment start before or after that first payment?
- What's your buffer if the first claim is delayed or only partially approved?
- Have you tested this against a conservative view of any follow-on work, rather than assuming it?
Where finance structure fits in
Working capital and finance structure work together, not separately. A deposit that looks efficient on paper can leave too little cash in reserve for the mobilisation gap above. A repayment that starts immediately, rather than being aligned to when the job actually starts paying, can squeeze the same buffer you're trying to protect. These trade-offs — deposit size, repayment timing, term and balloon — are covered in full in Managing Cashflow: How to Structure Business and Equipment Loans Around the Way Your Business Earns. This article won't repeat that detail; it's the reason working capital and finance structure need to be planned together, not in isolation.
Final thought
A signed contract is genuine progress. It isn't yet cash. Size the gap between mobilising and getting paid before you commit crew, fuel and machinery to it, and keep enough working capital in reserve to cover it if the timing slips. Talk to TMF about structuring your next move properly.
Frequently asked questions
What mobilisation costs should actually be counted in the buffer?
Costs to include may include crew wages and on-costs, fuel, transport and establishment, permits and insurance, any new machinery deposit, and finance repayments that fall due before the first payment arrives. See Managing Cashflow: How to Structure Business and Equipment Loans Around the Way Your Business Earns for the full definition of working capital and how it fits alongside these costs.
How much buffer is enough before mobilising?
There's no fixed percentage. Start by costing the realistic gap between mobilisation and the first payment landing, then add a margin for delay. A longer or less certain claim cycle needs a bigger buffer than a short, well-defined one.
Does a bigger deposit on new machinery help or hurt working capital?
It can do either. A larger deposit can reduce the amount financed and the ongoing repayment, but it also uses cash that might be needed to cover the mobilisation gap. The right balance depends on the job's payment terms and how much cash the business can genuinely spare upfront.
What if the first payment is delayed?
This is exactly what a working-capital buffer is for. Build the buffer around a conservative view of the claim cycle, not the fastest possible outcome, and keep it separate from money already committed to wages, fuel and finance repayments.
Important note
This article provides general information and education only. It is not personal financial, tax or legal advice. Finance approval, rates, terms and structures depend on lender assessment, business circumstances, asset details and supporting documentation. Calculators referenced are indicative only and their outputs are not a serviceability assessment, approval or formal offer. Operators should seek advice appropriate to their own circumstances before committing to a finance structure.