2 min read
The mobilisation gap most directors underestimate
When a company wins a significant contract, the instinct is to celebrate and move quickly. What often follows is a quiet cash-flow crisis: subcontractors need paying, equipment must be hired or purchased, compliance certificates renewed, and new staff onboarded — all before the first milestone invoice can be raised. If the contract has 60-day payment terms, the cash gap can run to three or four months.
This is not a sign of poor planning. It is a structural feature of contract-led businesses, and it affects profitable companies as much as struggling ones. The scale of the opportunity is precisely what creates the strain.
Sizing the funding requirement accurately
Work through the contract delivery schedule and identify every cost that must be incurred before you can raise your first invoice. Group them into labour (including employer NI and pension), materials and subcontractor costs, equipment, and overheads. Then map when each payment falls due against your billing milestones.
- Include the employer's cost of new hires, not just salary
- Check whether the contract requires you to post a performance bond or deposit
- Add a 10–15% contingency for scope movement in early weeks
- Confirm whether you can invoice on delivery milestones or only on completion
The result is a net cash-out figure by week — the shape of the gap a facility needs to fill.
Using the contract itself as part of the lending conversation
A signed contract with a creditworthy counterparty is a meaningful document when approaching a commercial lender. It demonstrates a defined income stream and a completion timeline, both of which inform the risk assessment. Bring the signed agreement, the payment schedule, and any advance-payment or milestone clauses to the conversation.
Lenders focused on B2B finance understand contract-led cash cycles; presenting the situation clearly — rather than simply asking for working capital — tends to produce faster decisions.
Structuring repayment around contract receipts
Where possible, align drawdown and repayment with the billing schedule. If you can invoice at 30%, 60% and 100% of project completion, structure repayment to follow those receipt dates rather than arbitrary monthly instalments. This reduces the risk of your business holding an active facility longer than necessary, which reduces cost.
All repayment examples here are illustrative and do not constitute a rate or fee offer from Credicorp.
Frequently asked questions
What if the contract is with a public-sector body that pays reliably but slowly?
Public-sector counterparties are generally regarded as low credit risk, which strengthens the lending case. The key issue is timing: government payment terms can run to 30 days from invoice approval, which itself may lag delivery by weeks. Document the payment cycle clearly when presenting to a lender.
Can we draw down in stages rather than taking the full amount upfront?
A revolving facility or staged drawdown term loan lets you borrow only what you need at each phase, reducing the interest cost compared with drawing the full amount on day one. This is worth discussing with a lender if your mobilisation costs are spread over several weeks.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.