The Growth Gap: Why Winning More Work Can Still Create Cash Flow Pressure

For many Australian businesses, winning new work is a clear sign of success. A bigger client, a larger contract or a growing pipeline can create exciting opportunities for expansion.

But growth doesn’t always mean more cash is immediately available.

In fact, one of the biggest challenges businesses can face when expanding is having enough working capital to support growth before customer payments arrive.

This is particularly relevant for service-based businesses, manufacturers, wholesalers, recruiters, IT companies, marketing agencies and other businesses that regularly provide products or services before receiving payment.

A business can have a strong pipeline, healthy sales and profitable customers, yet still experience cash flow pressure simply because expenses need to be paid before invoices are settled.

Growth Comes With Upfront Costs

Taking on new work often requires businesses to spend money before they receive the associated revenue.

For example, winning a larger contract may require a business to:

• Hire additional employees
• Engage contractors
• Purchase equipment
• Increase inventory
• Pay suppliers
• Invest in technology
• Increase marketing activity
• Expand production capacity

These costs can arise immediately, while the customer may have 30, 45 or even 60 days to pay.

This creates a timing gap between doing the work and receiving the money.

For businesses growing quickly, managing this gap can be just as important as winning the work itself.

More Sales Don’t Always Mean More Available Cash

It can be tempting to assume that increasing sales will automatically improve a business’s financial position.

However, sales and cash flow are not the same thing.

Imagine an Australian business wins a $100,000 contract. The opportunity looks excellent, but delivering the project requires $40,000 in wages, materials and other expenses before the customer’s invoice is paid.

The business may have secured $100,000 in revenue, but it still needs enough working capital to fund the project while waiting for payment.

If several projects are running simultaneously, these cash flow gaps can become even larger.

This is why businesses need to consider not only how much work they are winning, but how they will fund that work until payment arrives.

The Bigger the Opportunity, the Bigger the Cash Flow Requirement

Growth can sometimes create a surprising problem: the more successful a business becomes, the more working capital it may need.

A manufacturer receiving a major retail order may need to purchase additional stock and materials.

A recruitment business filling more roles may need to pay employees before receiving client fees.

An IT business taking on a large project may need to hire specialists or purchase additional technology.

A marketing agency securing a major account may need to increase advertising spend or expand its creative team.

In each case, the opportunity itself creates additional costs.

Without sufficient working capital, businesses may find themselves unable to take full advantage of opportunities that are otherwise profitable.

Planning Cash Flow Before Taking on New Work

Before accepting a significant new contract, businesses should consider the financial requirements involved.

Some useful questions include:

How much will it cost to deliver the work?

When will those costs need to be paid?

When is the customer expected to pay?

Will additional staff or contractors be required?

How much working capital will be needed during the project?

Are there other major expenses due at the same time?

Answering these questions can help business owners understand whether growth is financially manageable.

Cash flow forecasting can also help identify periods where outgoing payments are likely to exceed incoming funds.

The earlier these gaps are identified, the more time businesses have to plan.

Don’t Let Payment Terms Dictate Your Growth

Long payment terms are common across Australian business.

Large customers may require suppliers and service providers to accept payment terms of 30, 45 or 60 days.

For the customer, this may be standard practice.

For the supplier, however, those terms can mean carrying the cost of delivering the work for several weeks.

This can place pressure on businesses that are growing quickly or operating with limited working capital.

The challenge isn’t necessarily that customers are unwilling to pay. It’s that the business needs access to cash before the invoice becomes due.

Unlocking Working Capital From Unpaid Invoices

For businesses with eligible outstanding invoices, Invoice Financing can provide another way to manage this timing gap.

Instead of waiting for customers to pay according to their existing terms, businesses can access working capital linked to unpaid invoices sooner.

This can help businesses continue funding their operations while waiting for customer payments.

The additional working capital may be used to:

• Pay employees and contractors
• Purchase stock or materials
• Pay suppliers
• Fund new projects
• Invest in technology
• Expand operations
• Take on larger contracts
• Manage everyday expenses

Importantly, invoice financing can allow businesses to maintain their existing customer payment terms rather than requiring customers to pay earlier.

Managing the Costs Behind Business Growth

While accessing working capital can help businesses manage incoming cash, growth also means managing the expenses that need to be paid along the way.

Supplier invoices, equipment purchases, technology costs and other business expenses can all place pressure on available cash, particularly when several growth-related expenses occur at the same time.

This is where flexible payment solutions can help businesses manage the timing of their outgoing payments.

Selectpay also offers a range of payment solutions that allow businesses to spread the cost of supplier invoices and business expenses.

Buy Now Pay Later

Selectpay’s Buy Now Pay Later (BNPL) solution allows eligible business expenses to be paid through four instalments over 90 days, for a 5.99% fee*.

For a growing business, spreading an eligible expense across four instalments can help manage the timing of payments and keep more working capital available for other business needs.

This can be particularly useful when a business needs to purchase supplies, manage a supplier invoice or cover another eligible business expense while continuing to invest in growth.

Cash Flow Finance

Selectpay’s Cash Flow Finance provides another option for businesses looking to spread the cost of supplier invoices and business expenses.

Businesses can pay weekly over 4, 8 or 12 weeks, with fees of:

• 2.75% for 4 weeks*
• 5.25% for 8 weeks*
• 6.5% for 12 weeks*

By spreading payments over an agreed period, businesses can better manage the timing of their expenses and keep available cash focused on other important commitments.

For businesses taking on new work, having greater flexibility around outgoing payments can help make growth easier to manage.

A More Balanced Approach to Business Cash Flow

Managing growth isn’t simply about accessing more money.

Businesses need to consider both sides of their cash flow: when money comes into the business and when money needs to go out.

Invoice Financing can help eligible businesses access working capital tied up in unpaid invoices.

At the same time, Buy Now Pay Later and Cash Flow Finance can help businesses spread the cost of eligible supplier invoices and business expenses.

Having different options available can help business owners respond to different cash flow requirements as their business grows.

For example, a business waiting 45 days for a major customer to pay may consider Invoice Financing to access working capital sooner. Meanwhile, a business facing a large supplier invoice may consider a payment solution that allows the expense to be spread over a set period.

The right solution will depend on the business’s circumstances, the expense involved and eligibility.

Growth Should Create Opportunities, Not Financial Stress

Successful growth requires more than simply increasing sales.

Businesses need the people, resources and working capital required to deliver the work successfully.

When cash flow is well managed, business owners can make growth decisions based on opportunity rather than short-term financial pressure.

This can create greater confidence when deciding whether to hire another employee, accept a larger contract, expand production or invest in new technology.

The goal isn’t to grow at any cost.

It’s to build a business that has the financial flexibility to grow sustainably.

Turn Your Next Opportunity Into Growth

Australia’s business environment continues to create opportunities across a wide range of industries.

For businesses with strong demand, the next challenge may not be finding more customers — it may be having enough working capital to support the customers they already have.

By planning ahead, understanding payment cycles, actively managing outstanding invoices and considering flexible ways to manage business expenses, businesses can put themselves in a stronger position to pursue new opportunities.

Growth is exciting, but growth needs cash flow behind it.

Keep Your Business Moving with Selectpay

Waiting for customer payments shouldn’t prevent your business from taking on its next opportunity.

Selectpay offers a range of cash flow solutions designed to help Australian businesses manage both incoming and outgoing payments.

Selectpay’s Invoice Financing solution helps eligible Australian businesses unlock the value of unpaid invoices, providing access to working capital sooner while allowing customers to maintain their existing payment terms.

For businesses managing supplier invoices and other eligible expenses, Buy Now Pay Later allows payments to be spread across four instalments over 90 days for a 5.99% fee*.

Alternatively, Cash Flow Finance allows businesses to pay weekly over 4, 8 or 12 weeks, with fees of 2.75%, 5.25% or 6.5% respectively*.

Whether you’re taking on a larger contract, expanding your team, increasing production, managing supplier costs or investing in your next stage of growth, having greater flexibility over your cash flow can help your business keep moving forward.

Ready to support your next growth opportunity? Click here to learn more about Selectpay’s cash flow solutions.