How much cash does a project actually tie up?

Under payment on completion, all of your costs plus every day of payment terms. You fund materials and labour from your own resources for the whole build and then wait out the terms as well, so the peak is your full cost for the job and it sits there until the money lands. That figure is routinely larger than the profit on the job, which is the uncomfortable arithmetic of project work: you can be fully booked, profitable on paper, and unable to start the next job because the cash from the last one has not arrived.

How much does a deposit really help?

More than almost anything else you can negotiate, because it arrives before you have spent anything. A deposit paid up front covers your early costs at the exact moment your cash position would otherwise be falling fastest, and it reduces the peak by close to its own value. Progress claims help too but arrive later, so each one reduces the peak by less than the deposit does. If you can change only one term in a contract, the deposit is usually the one worth changing.

Why do payment terms matter so much?

Because they extend every part of the deficit at once. Terms of the 20th of the month following an invoice can mean 50 days between doing the work and being paid for it, and during all of that time you are funding your client's project from your own money. Lengthening terms does not just delay the final payment; it delays every progress claim by the same amount, so a structure that looked comfortable on 7 day terms can be unworkable on 45 day ones without a single other change.

What does the funding actually cost me?

If you fund the gap with an overdraft or a business credit facility, the cost is the balance multiplied by the rate for the days you are down. That is the number this calculator reports, and on a single job it is often small enough to look ignorable. The real cost is usually the opportunity one: cash committed to this job is cash you cannot commit to the next, so the constraint bites as a limit on how many jobs you can run at once rather than as an interest charge.

Does GST make the cashflow worse?

It can, and it is not modelled here. If you account for GST on an invoice basis, you owe the GST on a progress claim in the period you issue it, which may fall due before the client has paid you. Businesses with long payment terms and lumpy invoicing sometimes move to a payments basis for exactly this reason, subject to the turnover threshold. Retentions, which are common in construction and hold back a percentage until well after completion, are also excluded here and make the real position worse than these figures show.

Progress Payment Cashflow Calculator NZ 2026

Reviewed 5 August 2026.

Quick answer A $60,000.00 project running 12 weeks, with costs at 60% of the value and 30 day payment terms, ties up $12,428.57 at its worst point on a 20% deposit with 3 progress claims. Paid on completion instead, the peak is $36,000.00, which is $23,571.43 more cash you have to find. The job only makes $24,000.00, so paying on completion means funding 150.00% of the profit before you see any of it.

Counsel.day · the numbers say you can. Should you? Sealed daily votes, one verdict · first Solo decision free

Project work fails on cash far more often than it fails on price. A job can be quoted well, run to programme and turn a genuine profit, and still put a business under, because the money goes out steadily from the first week and comes back in one lump at the end. The gap between those two is not an accounting abstraction, it is an overdraft or a credit card or an invoice from a supplier you cannot pay yet, and its size is entirely determined by the payment structure in the contract rather than by anything about the work itself. A deposit is worth more than a progress claim of the same amount because it arrives before you have spent anything. A progress claim is worth more than a longer payment term is worth taking away. This calculator runs your project day by day under three structures, and reports the deepest point your cash reaches, how long you stay down there, and what funding that gap costs, so that the payment terms can be argued about with a number attached.

Project value What you are charging, excluding GST

Project length Weeks from start to completion

Your costs Percentage of the project value

Deposit Percentage, paid at the start

Progress claims Interim claims before the final one

Payment terms Days from claim to money arriving

Cost of funding Overdraft or credit rate, percent a year

Peak cash you must fund
$12,428.57
20% deposit and 3 progress claims

Peak if paid on completion

$36,000.00

one invoice at the end

What staging saves you

$23,571.43

less cash tied up at the worst point

The job

Project value$60,000.00

Your costs$36,000.00

Profit on the job$24,000.00

Project length84 days

Cost you fund each week$3,000.00

Deposit$12,000.00

Each claim after the deposit$12,000.00

Claim datesday 21, day 42, day 63, day 84

Final payment received on day114

Your staged structure against payment on completion

Peak funding, staged$12,428.57

Peak funding, paid on completion$36,000.00

Reduction in peak funding$23,571.43

Days in deficit, staged75

Days in deficit, paid on completion113

Funding cost, staged$113.71

Funding cost, paid on completion$846.25

Interest saved by staging$732.54

Peak funding as a share of the profit, staged51.79%

Peak funding as a share of the profit, on completion150.00%

Three payment structures on the same job

Same work, same costs, same terms. Only the timing of the money changes. Your own structure is highlighted.

Structure	Peak funding	Days in deficit	Funding cost	Cash positive from

This is an estimate, not financial advice. It assumes costs are incurred evenly across the project, that every claim is paid exactly on terms, and that there are no variations, defects or disputes. Retentions, which are common in construction and hold back a percentage of each claim until after completion, are not modelled and make the real position worse. GST timing is excluded: on an invoice basis you may owe GST on a claim before the client has paid it. Contracts under the Construction Contracts Act have their own payment claim and payment schedule rules and timeframes, which override whatever terms you assume here.

Why the deposit does the heavy lifting

Every payment reduces the peak, but not by the same amount, and the difference is about timing rather than size. Your cash position falls fastest at the start, when costs have begun and nothing has come in, so money arriving early lands exactly where the hole is deepest. A deposit paid before work starts offsets those first weeks almost dollar for dollar. A progress claim raised at the halfway point arrives after the position has already been dug, and pulls the later part of the curve up without touching the early part at all. That is why negotiating a deposit up from ten percent to twenty is usually worth more than adding another progress claim, and why a job with no deposit is a job you are financing regardless of how many claims follow.

The peak matters more than the profit

The number that decides whether you can take a job is not the margin, it is the deepest point of the cash curve, because that is what has to exist in an account before you start. When the peak exceeds the profit, and on payment-on-completion terms it very often does, the job is consuming more capital than it generates until the day it settles. Run two such jobs at once and the requirement doubles while the profit only doubles at the end. This is the mechanism behind the oldest pattern in trade businesses: growth in the order book producing a cash crisis rather than a windfall, with the crisis arriving precisely when things are going well.

Worked example

A $60,000.00 job runs 12 weeks with costs of 60% of the value, which is $36,000.00, leaving $24,000.00 of profit. Costs run at $3,000.00 a week. A 20% deposit of $12,000.00 is claimed at the start and three progress claims plus the final claim of $12,000.00 each follow, all paid 30 days after they are issued, with the last money arriving on day 114.

On that structure the cash position bottoms out at $12,428.57 and stays negative for 75 days, costing $113.71 to fund at 12%. Paid on completion instead, the peak is $36,000.00 across 113 days, costing $846.25. Staging the payments therefore reduces the cash you must find by $23,571.43, and the interest saved is $732.54. The interest is the small number and the peak is the large one, which is the point: this is a capital problem, not an interest problem.

How this is calculated

The project is simulated a day at a time. Total cost is the project value multiplied by your cost percentage, spread evenly across the days of the project. The deposit is claimed on day zero and every other claim is spread evenly across the project length, with the final claim on the completion day, and each is received the number of days later that you set as your payment terms. The running balance is costs out and receipts in, and the peak funding requirement is the deepest that balance reaches. Days in deficit counts every day the balance is below zero. Funding cost applies your annual rate divided by 365 to each day's deficit, which is how an overdraft charges. The three structures compared are identical except in when the money is claimed.

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