Tender won, security due: funding a contract deposit or bank guarantee on time

Winning a tender is the start of the deadlines, not the end. Within days of the letter of award, the contract may require you to lodge security, take out new insurances, mobilise equipment and staff — all before the first progress payment arrives weeks later.

If those dates are missed, the principal can sometimes walk away. This page is about making sure the money is there in time.

What deadlines come with a new contract?

Read the contract — the general conditions and the special conditions — and list every date. Common ones:

• Security — cash retention, a bank guarantee or an insurance bond, due before work starts or before the first claim
• Insurances — contract works, public liability, workers compensation, sometimes professional indemnity
• Mobilisation — plant hire, site set-up, materials, extra staff
• First progress claim — when you can claim, and when the principal must pay

Security is often expressed as a percentage of the contract value. Confirm the exact amount and form with the principal — “5% security” can mean different things in different contracts.

Why is the gap bigger than it looks?

Because almost everything happens before the money arrives. A typical start looks like this:

Week	Out	In
0	Security lodged
1–2	Insurances, plant hire, materials deposit
2–6	Wages for the crew
4		First claim submitted
6–8		First claim paid

The deepest point of that table is often well over the security amount alone. Fund the whole gap, not just the security.

What’s realistic by timeline?

Time to the security date	Realistic options	Notes
A few days	Property-secured up to $5m, possible within 24–48 hours; same day possible for $20k – $250k	Have property details ready
One to two weeks	Unsecured cash-flow funding, typically $5k – $500k; secured options	Bring the letter of award
Several weeks	Time to structure a facility covering security and mobilisation	Talk to your bank about the guarantee at the same time

Once you have the letter of award, send the 60-second enquiry or ring 1300 752 188.

What to have ready when you call

1. The letter of award and the contract, including the security clause.
2. The form of security required — cash, bank guarantee or bond — and the due date.
3. Your mobilisation budget and the first claim date.
4. Business bank statements, ABN or ACN, and your trading history.
5. Your pipeline — other contracts on the go and when they pay.
6. Property details if you want a larger or faster facility.

The proof of the deadline page covers how to present contract documents so they’re quick to assess.

Who pays you, and how fast?

Payment terms matter as much as the contract value. A few things to check:

• Government principals. Treasury’s Payment Times Procurement Connected Policy requires large businesses (annual income over $100 million) awarded Australian Government contracts over $4 million to pay their new subcontracts of up to $1 million within 20 calendar days.
• Large head contractors. Many large businesses must report their payment times; the payment times guide shows how to look them up.
• Security of payment laws. Each state has its own building and construction security of payment legislation setting out how payment claims work. Your state’s building regulator explains the process.

Bank guarantee or cash security?

If the contract allows a bank guarantee, your bank will usually issue it against cash held or property security. That ties up money or equity but keeps cash out of the principal’s hands. If the contract requires cash retention, the money leaves your account until the defects period ends. Either way, funding can supply what sits behind the security — the question is which form costs you less overall.

An illustrative contract start

Illustrative example only. A civil contractor wins a council drainage contract worth $1.4m. The contract requires 5% security before site possession, about $70k, plus contract works insurance and plant hire. The first claim is paid around week seven. The contractor’s cash timeline shows a deepest point of roughly $190k in week six.

Using a commercial property as security, the contractor arranges a facility covering security and mobilisation, settled in 48 hours, and reduces it as claims are paid.

How do you price the cost of funding into a tender?

Ideally, before you submit. If your tender is likely to need security and mobilisation funding, the cost of that funding is a real project cost, just like plant hire or insurance. When you price the job:

• estimate the security amount and how long it will be held — often until practical completion, with part retained through the defects period
• estimate your deepest cash gap and how long it will last
• include the total cost of funding those amounts, in dollars, in your margin calculations

Contractors who leave this out sometimes win work that turns out to be thinner than expected. Building it in means the job still makes sense on the day you’re arranging the money — and gives you a clear, realistic exit to describe when you ring.

Don’t lose the job to the paperwork

You’ve done the hard part by winning the work. Asking the Deadline Desk what’s possible doesn’t touch your credit file. We don’t shop your details across a pile of lenders — one team reads the contract dates and a real person calls you back.

Please give accurate figures on the enquiry form — contract value, security amount and due date, and when the first claim pays — so we can match you to funding that meets the contract’s dates. Or ring 1300 752 188.