I've taken on a new contract that needs upfront materials before I invoice anything

The situation: new work, old cash-flow problem

You have won a new contract. Good news, except the client's terms mean you invoice on delivery or on a milestone, while the supplier of materials wants paying now, or at least before you've been paid a penny for the job. The company has to fund the gap between buying in and being paid out, on a piece of work that hasn't generated any revenue yet.

This is a different problem to a late payer or a seasonal dip. There is no prior invoice trail with this client to point to, no history of the relationship, and often no track record on this particular type of job. Lenders and even your own finance team have less to go on, which is exactly why it needs handling deliberately rather than left to the overdraft to sort out.

The practical options, and where each one fits

Ask the client for a deposit or staged payment tied to material procurement — many will agree if you ask before signing, fewer will once the contract is live. Ask the materials supplier for account terms or a payment plan; suppliers who want the repeat business are often more flexible than a director assumes, especially with a purchase order in hand. Both routes cost nothing extra if they land, so they are worth trying first.

If neither gives enough headroom, the company's own reserves may cover it, though that ties up cash that might be needed elsewhere mid-contract if anything overruns. External finance — a working capital facility, invoice finance against the eventual invoice, or asset or trade finance against the materials themselves — is another route, used to bridge the specific gap rather than as general borrowing. None of these is automatically the right answer; the right one depends on the size of the spend relative to the contract, and how comfortable the director is with each trade-off.

Whichever route is chosen, it should be decided before the materials are ordered, not after the supplier invoice is already overdue.

Funding materials on work that hasn't been invoiced yet

The specific difficulty with pre-invoice materials spend is that there is no invoice to finance yet — the usual tool of invoice finance, which advances against a sales invoice already raised, doesn't apply until the work is done. What is available before that point is a working capital facility sized to the contract, drawn to cover the materials cost and repaid once the client pays.

Because there is no invoice as security, the contract itself becomes the main evidence: a signed order or agreement, a materials quote or supplier invoice, and a sense of when the client is expected to pay. Having those documents ready before approaching any funder, or any supplier being asked for terms, speeds the conversation up considerably and shows the spend is tied to real, committed work rather than a general cash shortfall.

What it means for you

Treat the materials gap as part of costing the contract, not an afterthought once the purchase order lands. Work out the shortfall in cash-flow terms before ordering anything, and line up whichever combination of client terms, supplier terms, reserves or external finance closes it, in that rough order of preference since the first two are free.

As an exempt business lender, Credicorp can look at working capital finance for limited companies and LLPs against a specific contract, but there is no guarantee of approval and this is not a substitute for getting the commercial terms right with the client and supplier first.