Use case

Contract mobilization funding: how to size it and what to watch.

Winning a big contract can create a cash problem before it creates a profit.

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What this looks like

Winning a big contract can create a cash problem before it creates a profit.

A new contract often requires hiring, materials, equipment and insurance before the first invoice. For trades, cleaning, security and staffing businesses, mobilization costs can equal several weeks of revenue.

How to size it

Add up costs until the first payment arrives: payroll, materials, equipment and any bonding or insurance. Ask for that amount, not the value of the contract.

Illustrative arithmetic

A commercial cleaning company depositing about $75,000 a month asks for $30,000 to staff a new office tower contract. At a 1.22 factor the payback is $36,600, a cost of $6,600. Over roughly 5 months that is about $349 per business day, or close to 10% of monthly deposits.

Total payback: $36,600.
Cost: $6,600.
Payment: about $349 per business day, close to 10% of monthly deposits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Which structure tends to fit

A short advance repaid from the contract's first invoices fits. Invoice factoring is another option once invoices are issued.

Where it goes wrong

Underestimating the time to first payment
Starting several new contracts at once
Forgetting holdbacks that delay final payment

Before you apply

Have the signed contract and start date
List costs before the first invoice
Know the client's payment terms

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Holdbacks on construction contracts

Construction contracts in Canada commonly hold back a share of each payment until the work is complete, under provincial lien and prompt-payment rules. That money is earned but not available. Count it as delayed when you plan mobilization, so the advance is not repaid from cash you will not see for months.

Common questions

How much should I ask for?

Ask for the amount you can name in dollars and tie to a quote, invoice or schedule. A smaller, specific request is easier to approve and cheaper to repay.

Which structure is best?

It depends on whether the need is a one-time purchase or a recurring gap. See the comparison pages for the trade-offs.

How fast can I get it?

Decisions are often the same day on a complete file, and funding can follow the next business day.

Keep reading

Funding use casesPayroll, inventory, expansion and more Merchant cash advance CanadaHow an advance against future card sales works Revenue-based financing CanadaRepay a fixed multiple as a share of revenue Cash-flow affordability calculatorCan the month carry the payment?Underwriting situationsCredit, NSFs, time in business and more

Educational information only. It is not legal, tax or accounting advice.

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