Urgent working capital: size the gap before you fund it

Is it a gap, or is it a hole?

Before borrowing for working capital, it helps to know which problem you have. A gap is timing: the money is coming, just not before the bills. A hole is when, even after all customers pay, there still isn’t enough. Finance is a good tool for gaps. For holes, it only buys time to fix pricing, costs or volume.

The quickest way to tell is a simple week-by-week map. business.gov.au recommends keeping a cash flow forecast for exactly this reason — it shows when money will be short before it happens.

How do you map the gap in 30 minutes?

Take a sheet of paper or a spreadsheet and draw eight columns, one per week.

1. Opening balance for this week — what’s in the account today.
2. Cash in — only money you’re confident of: invoices due from reliable customers, card settlements, deposits already agreed. Leave out hopes.
3. Cash out — wages and super, supplier runs, rent, loan repayments, BAS or PAYG, insurance, subscriptions.
4. Closing balance — opening plus in, minus out. Carry it to next week.

The lowest closing balance across the eight weeks is the real size of the gap. Most owners are surprised twice: first that the lowest point is later than the first shortfall, and second that it’s deeper. Funding just the first bill leaves you short again a fortnight later.

Week	Cash in	Cash out	Closing balance
1	$62k	$58k	$14k
2	$35k	$71k (payroll + rent)	−$22k
3	$48k	$40k	−$14k
4	$30k	$64k (BAS due)	−$48k
5	$95k (large invoice)	$52k	−$5k
6	$70k	$55k	$10k

Illustrative figures only. In this example, the first shortfall is $22k in week 2, but the real gap is $48k in week 4. Funding $25k would have meant a second scramble before the BAS date.

Which funding shape fits the gap?

• A single dip that recovers (like the example): a short-term loan sized to the deepest point, repaid when the large invoice lands.
• A saw-tooth pattern that opens every month-end or every season: a line of credit. Draw when the balance dips, repay as customers pay, and only pay for what you use.
• A gap plus a one-off bill (a tax debt, a deposit, a repair): consider a property-secured loan that covers both, so you’re not stacking facilities.

Unsecured and cash-flow options typically run from $5,000 to $500,000 for trading businesses, sized on turnover and bank statements; see how fast cash flow funding is assessed. Property-secured loans run from $20,000 to $5,000,000, with $20k to $250k possible same day and up to $5m possible within 24–48 hours. Once your map is done, you’re ready: bring the numbers to a real person.

What should you do while funding is arranged?

Working capital crunches respond well to small moves made early:

• Invoice faster. Send invoices the day the work is done, not at month-end.
• Chase the two biggest debtors personally. A phone call beats a reminder email.
• Ask for part-payments on big jobs or orders still in progress.
• Talk to suppliers before their due date, not after — see urgent supplier payment finance.
• Protect wages and super first. They carry the hardest deadlines; see business finance for payroll.

These don’t replace funding if the gap is large, but they often reduce how much you need, and lenders notice a business that manages its receivables actively.

How do you avoid over-borrowing?

Borrowing too little is the more common mistake, but over-borrowing costs money too. Size the facility to the deepest point in your map plus a sensible buffer — enough to cover one surprise, not three. If you can’t decide between two numbers, a line of credit removes the dilemma because you only draw what you need. Our page on how much to borrow goes further, and the business bill calendar helps you spot the next crunch weeks in advance.

What do lenders want to see for working capital?

Working capital lending is judged on whether the gap is genuinely temporary. The most persuasive things you can bring are simple:

• The cash map itself. Even a rough eight-week view shows you understand the problem and when it ends.
• The source of the recovery. Which invoices, contracts or seasonal trade close the gap, and when.
• Six months of bank statements, so the lender can see the normal rhythm of the business.
• A list of existing facilities, so the new one fits alongside them rather than on top of them.

A business that can explain its own gap in two sentences is usually a business that can be helped quickly.

Can working capital funding be repaid early?

Often a gap closes sooner than expected — a big invoice lands early or trade picks up. Ask about early repayment when you arrange the facility, so you know whether there are costs and can plan to clear it as soon as the money arrives.

Close the gap — see if you qualify

A working capital squeeze doesn’t mean the business is in trouble; it usually means it’s busy and waiting to be paid. Bring us your eight-week map, or just the deepest number and the date it hits. Making the enquiry won’t trigger a credit check, your details go to one team rather than a crowd of lenders, and a real person reviews your situation and calls you. Accurate numbers on the form — turnover, the gap and any property — mean the first option we suggest is the right size.

See if you qualify →