Quick answer
A big new customer usually means more upfront costs — stock, staff, materials, onboarding — and longer payment terms than you're used to. The result is a cash gap that grows with every order until payments start flowing. Before you sign, forecast that gap week by week, negotiate terms where you can, price in the delay, and arrange working capital so the contract that grows your business doesn't strain it.
Key points
- Big customers often pay on their own cycle — 30, 45 or 60 days, sometimes longer.
- The cash gap = costs incurred before payment, multiplied by the volume.
- Negotiate: deposits, mobilisation payments, progress billing, shorter terms.
- Arrange working capital before the first order, not after the first late payment.
The email lands: you’ve won the contract. A national retailer, a hospital network, a state agency, a major builder. It’s the kind of customer that changes a business — more volume, a name to put on your website, a step up.
It’s also, very often, the moment a healthy business discovers what a cash squeeze feels like. Not because anything’s gone wrong, but because big customers buy on their terms, and those terms stretch the gap between spending money and receiving it.
Why does a big customer strain cash flow?
Three forces combine.
1. Longer payment terms. Large organisations often pay on their own cycle — 30, 45 or 60 days from invoice, sometimes from the end of the month. Some only pay on set days.
2. Bigger upfront costs. More stock, more materials, extra staff or shifts, sometimes new equipment — all paid before the first invoice.
3. Onboarding friction. Supplier registration, insurance certificates, purchase order numbers, invoice formats. Get one detail wrong and the invoice misses the payment run.
Multiply these by the volume that made the contract attractive and the numbers grow quickly.
Remember too that the gap doesn’t close when the first payment arrives. For as long as the contract runs, a layer of working capital stays tied up in stock, work in progress and unpaid invoices. If the contract grows, that layer grows with it. Plan for the steady-state gap as well as the initial peak, and revisit it whenever volumes change. Owners who treat the working capital as a permanent part of the contract, rather than a temporary hump, rarely get caught short when the customer’s orders increase or a payment run is missed.
How big can the gap get? (Illustrative)
A food manufacturer wins a supply agreement worth $45,000 a week. Direct costs — ingredients, packaging, extra labour, freight — are 70% of sales, paid mostly within 14 days. The customer pays 60 days from end of month.
| Week | Cumulative sales to customer | Cumulative costs paid | Cumulative cash received | Cash gap |
|---|---|---|---|---|
| 4 | $180,000 | $94,500 | $0 | −$94,500 |
| 8 | $360,000 | $220,500 | $0 | −$220,500 |
| 12 | $540,000 | $346,500 | $180,000 | −$166,500 |
| 16 | $720,000 | $472,500 | $360,000 | −$112,500 |
Illustrative figures. The gap peaks at around $220,000 before the first payment arrives — on a contract that’s profitable from day one. After that it steadies, but a permanent layer of working capital stays tied up for as long as the contract runs. Our 13-week cash-flow forecaster lets you model your own version.
What can you negotiate before signing?
More than many small suppliers assume, particularly on custom work:
- A deposit or mobilisation payment to cover set-up and first materials — see deposits and progress payments.
- Progress billing on project work, rather than a single invoice at completion.
- Shorter terms for small suppliers. Some large organisations have policies that favour paying small businesses sooner. Ask.
- Invoice timing — weekly invoicing rather than monthly can pull payments forward.
- Price. If terms can’t move, they’re a cost. Build it into the price.
Our guide to payment terms covers the wording.
Already signed and the gap is looming? See what working capital you could access — enquiring doesn’t touch your credit file.
How do you make sure invoices get paid on time?
Big customers usually pay reliably — as long as the paperwork is perfect. Before the first delivery:
- complete supplier registration, bank details and insurance certificates;
- find out exactly what an invoice needs: PO number, cost centre, contact name, format;
- learn the payment calendar — cut-off dates and payment-run days;
- identify a person in accounts payable you can call.
Then invoice immediately, check each invoice has entered their system, and follow up well before the due date. A missed cut-off can add a whole month.
How much of your business should one customer be?
A big contract is exciting, but it can quietly make you dependent. If one customer becomes a large share of revenue, their terms, prices and decisions start shaping your whole business — and losing them would hurt. Keep building other customers alongside the big one. Our feature on losing your biggest customer explains why concentration matters and how to manage it.
How should the contract be funded?
Match the funding to the shape of the gap:
- A line of credit or working-capital facility that you draw as costs land and repay as invoices are paid. It flexes with volume.
- Equipment finance for machinery or vehicles the contract requires, spread across their working life.
- A property-secured facility for larger contracts or several at once, where you have property to offer.
Arrange it before the first order. It’s far easier to set up funding when your bank statements show a healthy business than after several weeks of a growing gap. Our growth plan guide shows how to present the numbers.
What will a lender want to see?
- the contract or purchase orders, and the customer’s payment terms;
- your cash flow forecast showing the gap and when it closes;
- your margins on the contract;
- your existing trading history and bank statements;
- any security available.
A signed contract with a creditworthy customer is a strong starting point. A forecast that shows you’ve thought about the gap is even stronger.
How should you price a big contract?
Volume invites discounting, but big customers cost more to serve in ways that aren’t always obvious:
- Longer payment terms — you’re financing their purchases. Estimate the cost of carrying the working capital and build it in.
- Compliance and reporting — insurance levels, safety documentation, audits, portals and reporting requirements take time.
- Service expectations — faster response, dedicated contacts, penalties for late delivery.
- Opportunity cost — capacity committed to them isn’t available for smaller, higher-margin customers.
Work out the gross margin on the contract after these costs, not before. A thinner margin can still be worth it for volume and credibility, but you should choose that knowingly. Our guide to improving gross profit margin shows how to measure margin by customer.
Before you sign: a quick checklist
- Payment terms confirmed in writing, including when the clock starts
- Deposit, mobilisation or progress payments negotiated where possible
- Invoice requirements and payment-run dates documented
- Contract margin calculated after the cost of carrying the terms
- 13-week forecast updated with the contract’s costs and receipts
- Working capital arranged to cover the peak gap
- Capacity plan — staff, equipment, suppliers — in place
- A plan to keep building other customers alongside this one
It’s also worth thinking about what happens at the end of the contract. Big agreements usually have a term, and renewal isn’t guaranteed. Build your plan so the business would remain viable if the contract weren’t renewed: keep investing in other customers, avoid long fixed commitments that only make sense with this one account, and set aside part of the extra profit as a buffer. That way the contract grows the business without making it fragile, and you negotiate the renewal from strength rather than dependence.
Win the contract, then fund it with confidence
Big customers are how businesses step up. The cash gap they create is normal, predictable and fundable — as long as you see it coming.
We consider trading businesses for working-capital and line-of-credit facilities typically from $5,000 to $500,000, sized on turnover and bank statements, and property-secured loans from $20,000 to $5,000,000 for larger programmes. Getting in touch involves no credit check, we don’t hand your enquiry to a string of other lenders, and a real person looks at your contract and your numbers and calls you. Please fill in the form accurately — the contract size, the customer’s terms and your turnover — so we can map out the right option on the first call.
Frequently asked questions
Why do large companies take longer to pay?
Many run fixed payment cycles, approval workflows and supplier onboarding processes. Invoices may need a purchase order, a specific format or sign-off before they enter the payment run.
How do I work out how much working capital a contract needs?
Forecast the weeks between spending on the contract and being paid for it. Add up costs incurred before the first payment, then track how the gap changes as orders repeat. The deepest point is your working capital need.
Can I negotiate payment terms with a big customer?
Often more than you'd think, especially on custom or project work. Ask for a deposit, mobilisation payment, progress claims or shorter terms for small suppliers. If terms can't move, reflect them in your price.
What kind of finance suits a big contract?
Usually a working-capital facility or line of credit that you draw as costs land and repay as invoices are paid. For larger programmes, a property-secured facility can provide more room.
What paperwork do big customers need before paying?
Commonly a supplier form, ABN, bank details, insurance certificates and a purchase order number on every invoice. Missing any of these can delay payment by weeks, so sort them out early.