A construction job can look like good news until the supplier asks for a deposit. You have the contract, the crew and a date to begin, but the customer may not pay until you have completed part of the work. Materials, delivery and site preparation all need cash first.
The useful question is how much must leave your bank account before the first customer payment is available? You can answer it by putting supplier dates beside the project's billing dates.
Why a signed contract may still leave a cash gap
Imagine that a company wins a job to install commercial interiors. The supplier will reserve the materials only after receiving a deposit. The balance is payable before delivery. The contractor can send its first progress invoice only after a defined stage is completed, and the customer still needs time to review and pay that invoice.
A progress invoice is a bill sent for an agreed stage of completed work. A supplier deposit is money paid before the materials have arrived. Those dates are set by the contracts and invoices, not by the day you expect the job to be profitable.
When the contractor can invoice, when the customer must pay and whether any money is held back depend on the contract and applicable law. Federal construction prompt-payment rules cover a defined set of projects, so they should not be used to predict payment dates on every Canadian construction job. [1]
An illustrative material-purchase calendar
Here is a fictional job, with dates and dollar amounts chosen only to show how timing works. The contractor starts with $20,000 cash available for the project.
| Day | Cash event | Money in | Money out | Project cash balance |
|---|---|---|---|---|
| Start | Opening balance | — | — | $20,000 |
| 1 | Materials reservation deposit | — | $25,000 | −$5,000 |
| 8 | Remaining material payment | — | $20,000 | −$25,000 |
| 12 | Delivery and site preparation | — | $8,000 | −$33,000 |
| 20 | First eligible progress invoice sent | $0 | $0 | −$33,000 |
| 35 | Customer payment received | $50,000 | — | $17,000 |
The lowest projected balance is −$33,000 before the first payment. If the contractor wants to keep another $12,000 available for other bills, this particular calendar suggests a $45,000 liquidity gap. That figure is a cash-planning estimate, not a loan recommendation or a lender offer.
Now ask what happens if the supplier requires the full $45,000 on day one, or if the invoice can be sent only after an inspection. Those two changes could move the lowest cash balance and the date when the business gets its money back. An estimate based only on the contract's total value would miss both.
What to check with the supplier and customer first
Start by checking the supplier's deposit, balance and cancellation terms. Ask whether delivery can be split into stages, whether unused stock can be returned and whether the price changes if you order later. Then compare that with the project's start date and the point when you can actually invoice.
On the customer side, confirm the documents needed for approval, who signs off on completed work and what conditions could hold up payment. Do not assume an invoice is the same as cash in the account. If another business sits between you and the project owner, understand which party owes you the money.
Those details also help explain the project to a financing provider. They show why cash is needed now and what event is expected to replenish it.
Which financing questions are worth asking?
Working capital financing may be worth exploring if materials and operating costs create a temporary gap. A business line of credit may suit some businesses that face similar gaps across jobs. Whether either fits depends on actual lender review, repayment terms and the business's other commitments.
A signed construction contract is not automatically an eligible purchase order. Purchase order financing is generally discussed in connection with specific customer orders and supplier purchases; construction progress contracts can be reviewed differently. Ask what kind of order is eligible, whether the provider can pay a supplier directly and what happens if the project or delivery date changes. BDC's published purchase-order program illustrates that order-related lending may help cover buying or making goods for a confirmed customer order, but its terms are BDC's, not BGC's. [2]
Before applying, compare the cost and payment dates of any offer with the project's cash calendar. The cheapest-looking payment can still arrive at the wrong time. Our guide to comparing financing offers explains the questions to ask.
What records should be ready?
A provider may ask to see the signed project agreement, material quotes, supplier deposit invoices, project schedule, expected progress-billing dates, recent bank activity and any financing already in place. The exact request varies by provider and by project.
BGC is a Canadian financing broker, not a direct lender. We can review a financing request and explore suitable options through third-party partners, without guaranteeing a placement for a particular construction contract. You can review financing eligibility or submit a request within BGC's general CAD $30,000–$5 million application range.
Sources
- Public Services and Procurement Canada — Prompt payment in the construction industry. Scope of federal construction prompt-payment requirements.
- BDC — Purchase Order Financing. Example of order-based financing and its stated uses; not a BGC lender commitment.
The calendar is illustrative. Contract payment rights, statutory deadlines and security arrangements require project- and province-specific review.