How to price the cost of finance into a big job

The tender is in front of you. It’s bigger than anything you’ve done, the client is reputable, and the margin looks healthy on paper. But you know that delivering it means buying materials, paying extra hands and maybe hiring gear weeks or months before the first payment arrives. If you’ll borrow to bridge that, the cost of borrowing is part of the job. This guide shows how to price it in.

Why does finance belong in the quote?

Because it’s a cost of delivering the work, just like materials or labour. Picture two versions of the same job:

• Job priced without finance: margin looks healthy. You borrow to deliver it. The finance cost comes out of the margin.
• Job priced with finance: the finance cost is a line in the costing. Your margin is calculated on top.

Same work, same client, very different profit. On big jobs with long payment cycles, the finance cost can be large enough to turn a good job into an average one.

Step 1: Map the cash timeline

Before you can cost the finance, you need to know how much money will be out, and for how long. Lay out the job week by week or month by month. Business.gov.au’s cash flow statement template is a good starting format.

Money out, in the order it really leaves:

1. Mobilisation: insurances, permits, site setup, equipment hire or purchase.
2. Materials for each stage, often ordered ahead.
3. Labour: weekly or fortnightly pay, plus super with every pay run under payday super from 1 July 2026.
4. Subcontractors, on their terms.
5. Overheads that grow with the job: fuel, vehicles, admin.

Money in, in the order it really arrives:

1. Any deposit or mobilisation payment.
2. Progress payments, after you claim, the client approves and their payment terms run out.
3. Retention release, often well after completion.

Then calculate the running balance for the job: cumulative money in minus cumulative money out.

Step 2: Find the widest gap and how long it lasts

The lowest point on that running balance is your peak funding need. The number of weeks the balance stays negative is how long you’ll be carrying it.

What to find	Why it matters
Peak gap (most negative point)	Sets the facility size you need
Duration of the gap	Drives the finance cost
Shape of the gap (stepped or one big hole)	Suggests the right structure
Retention amount and release date	Extends the tail of the gap

A stepped gap that rises and falls with each progress claim usually suits a revolving facility, such as a business line of credit. One big upfront hole, such as buying a machine, may suit a defined loan or asset finance.

Step 3: Check the client’s payment behaviour

Your map is only as good as your payment assumptions. Before relying on “30 days”:

• Read the contract. Payment terms, claim cut-off dates, approval periods, retentions.
• Check their record. For larger businesses, the Payment Times Reporting Scheme publishes a register where you can search and compare payment times reports.
• Ask around. Other suppliers and subcontractors know who pays on time.

Business.gov.au’s guide to payment terms notes that business-to-business terms of 7, 14, 21 or 30 days or more are common, and that credit terms carry cash flow risk. With big clients, longer is common, so build the real number into your map, not the hopeful one.

If you’d like help sizing a facility from your cash map, send us the outline of the job. No credit check is involved in asking.

Step 4: Cost the finance in dollars

Now estimate what funding the gap will cost:

1. Get an indicative structure and cost for a facility sized to your peak gap, for the expected duration.
2. Include every fee: establishment, ongoing line or account fees, and any fees on the limit even when it’s not drawn.
3. Add a buffer for the job running long or payments arriving late.

The result is a dollar figure: the finance cost of this job. Our total cost comparer helps if you’re weighing two facility offers.

Step 5: Build it into the price

Add the finance cost to your job costs alongside materials, labour, subcontractors and overheads. Then apply your margin to the total.

Illustrative only, with made-up figures: a fit-out contractor costs a job at $400,000 in materials, labour and subcontractors. Mapping the cash flow shows a peak gap of about $150,000 lasting roughly three months, because the client pays 45 days after each stage. An indicative facility cost, with fees and a buffer for late payment, comes to around $6,000 for this job. The contractor adds that $6,000 to the cost base before applying the margin. On a tight tender, that’s the difference between a job that pays and one that just keeps everyone busy.

What if the price no longer wins the job?

Sometimes adding the finance cost makes your quote less competitive. You have options:

• Negotiate terms. A mobilisation payment, shorter payment terms or smaller retentions reduce the gap and the finance cost. That’s worth offering a small discount for.
• Change the staging. More frequent progress claims shrink the gap.
• Ask suppliers for longer terms. Business.gov.au’s cash flow tips suggest negotiating supplier terms.
• Walk away. If the job only works without counting the finance cost, it doesn’t really work.

What happens if payments come late anyway?

Late payment extends the gap and raises the finance cost. Know your steps in advance. Business.gov.au’s guide to what to do when you haven’t been paid runs from checking the contract and sending reminders, through letters of demand and dispute resolution, to debt collection and legal action.

And watch the bigger picture. Taking on several big jobs at once, each with its own gap, is one of the classic paths to running out of cash while busy. Our guide to overtrading warning signs explains what to look for.

What’s the checklist, in short?

• Map money out and money in, stage by stage.
• Find the peak gap and how long it lasts.
• Check the client’s real payment behaviour and retentions.
• Cost the finance in dollars, fees and buffer included.
• Add it to the cost base before your margin.
• Negotiate terms that shrink the gap.

For the structure itself, read the best way to fund a big contract. If the job needs extra staff, see the best way to fund hiring.

Should you tell the client you’re pricing in finance?

You don’t need to itemise it, any more than you’d itemise your insurance or vehicle costs. But if the client asks for longer payment terms or larger retentions during negotiation, it’s fair to explain that those terms have a cost, and to price them accordingly. Many larger clients understand this, and some will agree to a mobilisation payment or shorter terms in exchange for a sharper price.

A simple way to frame it: “Our price assumes payment within the contract terms. Longer terms are possible, and here’s what they add.” That keeps the conversation commercial rather than personal, and protects your margin either way.

Does this apply to smaller jobs too?

The same logic holds whenever a job’s costs land well before its payments, even on a modest scale. For routine work, a simple rule of thumb in your pricing may be enough; for anything unusually large or slow-paying, map it properly.

Quoting something big?

Before you lock in your price, find out what the finance will actually cost. Tell us about the job in about a minute: the contract value, the payment terms and your cash map if you have one. A specialist will help you size the facility and put a dollar figure on it.

We don’t check your credit at the enquiry stage, and your details aren’t distributed to a crowd of lenders. The more accurately you describe the job’s timing, the more accurately we can help you price it.