Winning the contract is the easy part: modelling the cash gap before you accept 60-day terms

Profit and cash are different clocks. A purchase order with healthy margin looks identical on a spreadsheet whether it funds you or finishes you. The difference only appears when you put dates against the dollars. Here is the typical sequence for a product business landing its first real retail account. You pay the manufacturer a deposit to start production. You pay the balance before goods leave the factory. You pay freight, duty and GST at the border. You pay the 3PL to receive, store and pick. You ship. The retailer receives, scans, and starts the clock. Then you wait. That waiting period is the part most easily left out of the model. One post on r/ausbusiness put the consequence plainly: “If your runway isn’t prepared for that, the partnership breaks before it begins.” Commercial subcontracting has the same shape with different labels. Progress claim, assessment period, payment, then retention held back for months. As one commenter put it on r/ausbusiness: “I wait sometimes 60 days. Then retention. Commercial is hard game”. Same disease. You fund the customer's working capital out of your own account, and the bigger the win, the bigger the loan you are involuntarily making.

You do not need forecasting software. You need one row per event and a running balance. Twenty minutes in a spreadsheet beats a year of hoping. Build it like this. List every cash outflow tied to the order, with the date it actually leaves your account, not the date of the invoice. List every cash inflow, dated from when payment is realistically received, not when terms say it is due. Add your normal monthly fixed costs across the same window, because rent and wages do not pause for a purchase order. Run a cumulative balance down the column. Read the deepest negative number, which is your funding requirement. Then add a buffer for the two things that always happen: production slips and the first invoice gets queried. A worked shape for a single retail order, using placeholder dates rather than real client figures, looks like this. Day 0, manufacturer deposit out. Day 45, manufacturer balance out before shipping. Day 55, freight, duty and GST at the border out. Day 75, 3PL intake and storage out. Day 80, goods delivered to the retailer and invoice issued. Day 140, invoice due on 60 day terms. Day 155, payment actually lands. That is roughly five months of your money in someone else's inventory. Now do it again for the second order, which you will need to place before the first one is paid, because retailers reorder on their schedule and factories have lead times. Two overlapping orders is usually where the real number shows up.

Unit price is usually the number a buyer is measured on, so it is the hardest thing to move. If price will not shift, test the terms separately. Trade a small amount of margin for a shorter gap and you can be better off in cash even while looking worse on paper. Levers worth raising before you sign: payment days, asking for 30 days from invoice rather than 45 or 60 from end of month; the clock start, from dispatch rather than from receipt or scan-in; a deposit or part payment on the opening order, worth asking for from a new supplier; owned inventory instead of consignment, because consignment moves the whole gap onto you; a volume ramp of two smaller openers instead of one large one, which halves the funding requirement while proving sell-through; reduced retention percentage or a shorter release period, a common lever in commercial construction; rebates, claims and deductions agreed in writing up front so nothing shrinks the payment you modelled; and confirmed purchase order accuracy, including correct PO, GLN and ASN details before dispatch, which removes admin mismatches that hold up payment. That last one is the quiet killer. An invoice is not always late because the buyer is unwilling. It can sit unpaid because a reference number did not match, and nobody on your side noticed.

Set the threshold before the offer arrives, while you are still capable of thinking clearly about it. Three honest decline rules. First, if the deepest negative in your model exceeds the cash you can access without personal guarantees or high-cost lending, decline or shrink the order. Second, if one customer would represent so much of your revenue that a single payment delay stops wages, walk away, because concentration risk is a real cost even when the customer is reputable. Third, if the terms leave you unable to fund the reorder, decline, because winning a shelf and then failing to restock it is worse commercially than never being on the shelf. The counter-argument is real and deserves a fair hearing. Some businesses take the punishing deal deliberately, fund it with debt or invoice finance, and it works. Distribution compounds. A retail listing can create demand that outlives the contract. If you go in with eyes open, a properly costed facility and an agreed limit on how deep you will go, that is a strategic decision rather than an accident. What kills businesses is not the hard deal. It is the hard deal signed without the calendar.

The model is not a one-off document. It goes stale the moment production slips. Four numbers, reviewed weekly. Cash position today and the projected trough over the next 90 days. Days sales outstanding for the account, actual rather than contractual. Invoices issued but unacknowledged, because an unacknowledged invoice is not a receivable, it is a hope. And deductions or claims taken against payments, tracked against what was agreed. Most of this already exists in your accounting system. Xero and MYOB both hold invoice dates, due dates and payment dates. The problem is nobody pulls it into one view on a Monday morning, so the trough is discovered rather than anticipated.

Yes, and it is unglamorous work rather than anything clever. A weekly job that reads open invoices from your accounting system, adds your scheduled supplier payments, projects the balance forward and posts the trough into a channel where the owner will see it. No dashboards nobody opens. The part that matters is who owns it. A model built by an outside consultant becomes wrong the first time your supplier terms change, and nobody in the building knows how to fix it. That is how these things quietly die. The durable version is built and maintained by someone who already understands your order flow, because the hard skill here is not connecting apps. It is mapping the process correctly and diagnosing it when a number looks wrong. That is the premise behind buildAutomation: train two or three of your own people to build and own this, rather than renting it from an agency. If you want to talk through what that looks like for your order cycle, the enquiry form on the buildAutomation page is the place to start.

**What is a cash gap in a supply contract?** The cash gap is the number of days between money leaving your account for goods and money arriving from the customer for those goods. It includes manufacturing deposits, freight, duty and 3PL fees on one side, and the customer's payment terms on the other. **How long are typical retail payment terms in Australia?** Terms vary by retailer and category, so ask for them in writing before you quote. One Australian founder's public account of supplying a national retailer described being paid 45 to 60 days after shipping. Always model the date payment actually lands, not the contractual due date. **Should I use invoice finance to cover the gap?** It is a legitimate option when the cost is modelled against the margin on the specific order. The mistake is treating it as a reflex. Calculate the funding cost, subtract it from the contract's contribution, and check the deal still makes sense afterwards. **How do I negotiate better payment terms as a small supplier?** Ask for terms rather than price. Shorter payment days, the clock starting at dispatch, a deposit on the opening order, and a staged volume ramp all reduce your funding requirement. If unit price will not move, terms are the next thing to test. **What is retention and why does it hurt subcontractors?** Retention is a percentage of each progress claim held back by the head contractor, typically released after practical completion and again after a defects period. It sits on top of already long payment terms. One commenter in an Australian business thread described waiting up to 60 days for payment and then having retention held on top of that. **Do I need software to model a cash gap?** No. A single spreadsheet with dated outflows, dated inflows and a running cumulative balance is enough to find the trough. Automate it later, once you know which numbers you actually check each week.

Quotes attributed to r/ausbusiness. Threads: https://www.reddit.com/r/ausbusiness/comments/1pa94j9/ink_nurse_how_our_small_aussie_business_performed/ and https://www.reddit.com/r/ausbusiness/comments/1mi20md/help_chasing_late_invoices_tradies_sole_traders/. Evidence note: the customer voice in this article comes from two public Australian discussion threads. It is anecdotal, not a surveyed statistic. No figures in this article are presented as research findings.