The work is there.
Two more jobs have been accepted.
Another crew can start next month.
There is enough demand to keep them busy.
For a trade, construction or service business working around Gawler SA, that can look like a straightforward growth decision.
Then the first Monday arrives.
The new employees need wages.
The supplier account is larger.
Another ute is using fuel every day.
Materials have been delivered to jobs that will not be invoiced for another fortnight.
Subcontractors expect payment.
And the customer money from the additional work has not arrived yet.
Nothing has gone wrong.
The business has simply grown faster than its cash cycle.
That is one of the more important working capital issues to recognise before the final quarter becomes busier.
Another crew changes more than payroll
The obvious cost of adding capacity is wages.
But another crew can affect almost every part of the business.
There may be another vehicle on the road.
More fuel.
More tools.
More materials moving through supplier accounts.
Additional uniforms and safety equipment.
More administration.
Higher workers compensation or insurance related costs.
Potentially more subcontractors.
More jobs sitting in progress at the same time.
The new crew might generate excellent revenue.
The difficulty is that many of those costs start immediately while the additional customer receipts can lag several weeks behind.
Put a dollar figure on the first six weeks
Before increasing capacity, it can be useful to ignore the annual revenue forecast for a moment.
Look only at the first six weeks.
Suppose another crew adds:
$9,000 a week in wages and related employment costs
$4,000 a week in additional materials
$1,500 a week in fuel and vehicle costs
$2,000 a week in subcontractors and other job expenses
That is $16,500 a week.
Over six weeks, the business has potentially carried close to $100,000 of additional costs.
The jobs may eventually generate considerably more than that.
But the business needs to reach the point where those customer payments begin arriving.
That is the working capital question.
The first invoice is rarely the first payment
A business owner might think:
“We can invoice after two weeks, so we only need to fund two weeks.”
Usually, the cash cycle does not stop when the invoice is sent.
The job begins.
Employees and suppliers are paid.
A progress claim or invoice is prepared.
The customer receives it.
The invoice goes through approval.
Then the payment terms apply.
If the customer is on 30 day terms, the business may carry several additional weeks of costs after invoicing.
For larger commercial jobs, approvals can add more time again.
A six week funding gap can easily become eight or ten weeks depending on how the work is billed.
Watch the difference between job progress and cash progress
A job can be nearly finished while very little cash has returned.
That can create a misleading sense that the financial side should also be nearly complete.
Consider a contractor that is 80 per cent through a project.
Most materials have already been purchased.
Most labour has already been paid.
Subcontractors may have submitted invoices.
But the next progress payment has not yet been received.
Operationally, the business is close to completing the job.
Financially, it may be at the point where the greatest amount of its own money is tied up.
Those are two very different measures of progress.
Supplier accounts can hide the pressure for a while
Supplier credit can make growth easier to manage.
Materials are purchased today and paid later.
That provides valuable breathing room.
The problem can appear when several larger accounts fall due together.
A growing business may have significantly more materials moving through 30 day supplier accounts while customers are also taking 30 days or longer to pay.
If supplier terms and customer terms line up perfectly, the gap may be manageable.
If suppliers need payment before customers do, the business funds the difference.
The bigger the workload, the bigger that difference can become.
Account limits matter when purchasing increases
A supplier may have given the business a $60,000 or $100,000 account limit years ago.
Under normal trading, that may have been more than enough.
Add another crew and several overlapping jobs and the limit can suddenly matter.
The supplier might request a payment before releasing the next order.
A larger purchase could need partial payment upfront.
An account that has always worked comfortably may no longer support the business’s new volume.
That is worth discussing with key suppliers before the workload increases substantially.
Progress claims deserve their own cashflow calendar
For project based businesses, a monthly profit and loss statement does not always show the timing clearly enough.
Take the major jobs and create a simple timeline.
When does work start?
When are materials paid?
When are wages paid?
When can the first claim be raised?
Does the claim need certification?
How long does approval normally take?
When is payment actually expected?
Do the same for the next project.
Then the next.
The difficulty often becomes obvious once several jobs are placed on the same calendar.
The business may have multiple projects consuming cash in the same fortnight and very few customer receipts arriving during that period.
The problem may not be slow customers
Sometimes the customer pays exactly when agreed.
The cashflow gap still exists.
A contractor pays wages every week.
A customer pays 30 days after invoice.
There will always be a period where the business is funding the work.
Growth simply increases the amount being carried.
That distinction matters because the solution is not always “chase debtors harder”.
The customers may be doing nothing wrong.
The business may simply require more working capital to operate at the new size.
Hiring permanently and using subcontractors create different cashflow patterns
A business trying to increase capacity may choose between additional employees and subcontractors.
Both have cashflow consequences.
Permanent employees create regular payroll commitments regardless of whether every week is fully utilised.
Subcontractors may provide more flexibility but can have shorter payment expectations.
A subcontractor wanting payment in seven days while the end customer pays in 30 or 45 days can still create a significant gap.
The right decision depends on the business.
But the payment timing should be considered alongside the operational benefits.
What if the new crew needs another ute?
Growth often brings an asset requirement with it.
Another crew may need:
a ute
van
trailer
excavator
skid steer
access equipment
tools
other specialised equipment
The business might have enough cash to purchase an asset outright.
The question is whether that cash is more valuable supporting the asset purchase or supporting the additional payroll and jobs.
Depending on the asset and circumstances, asset finance may be worth comparing with a cash purchase.
That allows the business to look at the total cost of finance alongside the value of retaining more working capital.
A long term asset and six weeks of payroll are different funding needs.
It can make sense to treat them separately.
Growth can create an ATO problem later if every dollar is used now
Another risk appears when a business uses all available cash to support growth and forgets about obligations that have not yet fallen due.
GST.
PAYG.
Superannuation.
Income tax instalments.
These liabilities may not leave the bank account today, but that does not mean the money is genuinely free.
A business can be busy, profitable and growing and still feel an unexpected cash squeeze when several tax obligations fall due at once.
When calculating how much working capital is available, include known tax commitments rather than treating the entire account balance as spare cash.
A full pipeline can make it harder to say no
The more work a business wins, the easier it is to keep accepting more.
Another job fits.
Then another.
Each one looks profitable.
Eventually the issue is no longer whether the team can perform the work.
It is whether the business can fund all of those jobs simultaneously.
There is a point where taking one more profitable job can create unnecessary pressure if too much cash is already tied up elsewhere.
That is why capacity should be considered in two ways:
Can we physically deliver the work?
and
Can we financially carry the work?
Both matter.
The most useful number may be the lowest bank balance
Forecasts often focus on total revenue.
For working capital, I am more interested in the low point.
If everything currently expected happens broadly as planned, when does the business have the least available cash?
What causes that low point?
A major supplier payment?
Three payrolls before a progress claim?
An equipment deposit?
Several commercial customers paying in the following month?
Once that point is identified, the business can assess whether existing cash and facilities provide enough room.
Existing overdraft capacity should be measured honestly
A business may already have an overdraft or line of credit.
That can help absorb temporary timing differences.
But focus on unused capacity rather than the approved limit.
A $150,000 overdraft that normally sits $120,000 drawn does not provide another $150,000 for growth.
Its practical additional capacity is much smaller.
Then consider whether normal utilisation tends to increase at certain times of the month.
That shows how much flexibility the facility is actually providing.
Working capital finance can be relevant before an invoice exists
There may be a period where the business has started the work but cannot yet raise a qualifying invoice.
Payroll has begun.
Materials have been purchased.
The project is underway.
Depending on the business, lender and purpose, a working capital facility, business loan, overdraft or line of credit may be relevant to that stage.
The structure needs to fit how long the gap is expected to last and how the business expects to repay it.
A short timing gap should be understood as a timing gap.
It should not automatically become inappropriate long term debt.
Debtor finance may become relevant later
The position can change once eligible commercial invoices have been raised.
The work has been completed or the required milestone has been reached.
The business has invoiced the customer.
Now the money is sitting in accounts receivable.
For eligible B2B businesses, debtor or invoice finance may allow earlier access to part of the value of qualifying receivables.
Lenders may consider customer quality, invoice age, payment history, debtor concentration and the underlying transaction.
This can become particularly relevant when a growing business has more and more cash sitting in its debtor ledger.
The debtor ledger can grow faster than the bank balance
Suppose a business normally invoices $200,000 a month and grows to $350,000.
If customer payment behaviour stays exactly the same, the business will generally carry a larger amount of outstanding invoices.
That means growth itself can increase the debtor balance.
The business can report stronger sales and higher profit while the amount sitting outside the bank account also increases.
This is one reason rapid growth can feel surprisingly cash hungry.
Do not wait until payroll is Friday
A common mistake with working capital is waiting until the shortage becomes immediate.
Payroll is due.
A supplier has stopped the account.
The customer payment expected yesterday has not arrived.
Now the business needs an answer quickly.
Late September provides a better opportunity.
If October and November work is already becoming visible, the business can identify the likely gap before it becomes urgent.
That provides time to review customer terms, supplier arrangements, existing facilities and finance options properly.
Could customers contribute more during the job?
Before assuming the business needs to fund every additional cost itself, review the payment structure.
Could an upfront deposit be appropriate?
Could materials be paid before ordering?
Could larger projects use more frequent progress claims?
Could invoicing occur at clearly defined milestones rather than waiting until completion?
Could claims be submitted immediately rather than sitting until month end?
Not every arrangement can be changed.
Commercial clients may have strict procurement processes.
But where there is flexibility, improving the customer payment structure can reduce the amount of working capital the business needs.
Small billing delays become expensive when the business is growing
A completed job waiting three days to be invoiced might not seem significant.
Multiply that across twenty jobs and the amount of cash delayed can become substantial.
Administrative discipline matters more as turnover rises.
Invoices should be raised promptly.
Progress claims should be submitted when permitted.
Required documents should be attached correctly.
Purchase order details should be checked.
Debtors should be followed up.
Finance cannot compensate for money being unnecessarily delayed inside the business’s own processes.
October and November work can become December and January cash
A job does not have to start in December to become part of the Christmas cashflow problem.
Work commencing in October may run through November.
The invoice may be issued late November.
The customer could pay in December.
Another job invoiced during December could become January cash.
That is why the final quarter needs to be viewed as one continuous cash cycle.
The business may be funding the next job while still waiting for payment from the previous one.
January payroll does not care how profitable December was
A profitable December is excellent.
But when employees return in January, payroll still needs cash.
Supplier bills from December may be due.
Finance repayments continue.
Tax commitments continue.
New jobs may need materials.
Commercial invoices raised before Christmas may still be outstanding.
The business should therefore avoid structuring its final quarter so tightly that everything depends on December receipts arriving before the holiday period.
Ask this before adding the next crew
There are several numbers worth knowing:
How much extra will the crew cost each week?
How much more will move through supplier accounts?
How much additional revenue should the crew generate?
How long before that revenue is invoiced?
How long before it is collected?
How much cash is already tied up in current jobs?
What minimum buffer does the business want to retain?
That provides a much more useful growth decision than simply asking whether enough work exists to keep another crew busy.
Five questions Gawler businesses may ask when growth starts absorbing cash
We have plenty of work. Why is the bank balance getting tighter?
Growth often requires materials, wages and operating costs to be paid before the additional customer revenue is collected. A growing business can therefore become more profitable while temporarily using more working capital.
Can working capital finance help us add another crew?
Potentially. Depending on the lender and business, commercial finance may be considered for eligible payroll, suppliers and operating costs. The expected funding period and repayment source will generally matter.
Can we use debtor finance for progress claims?
It depends on the invoice, contract and lender requirements. Some project or progress claim arrangements require closer assessment than straightforward completed B2B invoices.
Should we finance the ute and keep the cash for wages?
That depends on the asset, cash reserves, finance cost and other business commitments. For eligible assets, comparing an asset finance structure with paying cash can show the effect of each option on working capital.
When should we start reviewing finance for October and November jobs?
Before the cash requirement becomes immediate. If upcoming work, payroll and supplier commitments can already be estimated, the business can assess the likely gap while there is still time to compare options.
The work can be profitable and still need funding
Growth should create opportunity.
But additional turnover does not arrive in the bank account on the same day the additional expenses begin.
For trades, contractors and growing service businesses in Gawler, adding another crew or taking on several new jobs can increase the amount of cash tied up in wages, materials, suppliers and outstanding invoices.
Thrive Broking can help businesses look at that complete cycle and compare relevant working capital, debtor finance, asset finance and other commercial funding options across our lender panel where appropriate.
The objective is not to borrow simply because the business is growing.
It is to understand whether the existing cash position can comfortably carry the growth until the additional customer money starts coming back.
A Broker’s Observation
When a business tells me it has enough work for another crew, I think that is only the first half of the decision.
The next question is:
Can the business carry another crew long enough for that crew to start paying for itself?
I would look at the extra payroll, materials, vehicle costs and supplier commitments.
Then I would look at when the first genuine cash from the additional jobs is expected to arrive.
The gap between those two points is what needs funding.
The work can be profitable.
The customers can be good.
The team can be capable.
And the business can still need more working capital simply because it has moved to the next stage of growth.