Quick answer
When a fixed-price job overruns, you usually face two problems at once: a cash gap until the final payment arrives, and a smaller profit, or a loss, on the job. Work out both separately. A short timing gap suits an overdraft, line of credit or short working capital loan. A larger hole, especially across several jobs, may need a bigger facility, often secured on property, plus a plan for repricing future work.
Key points
- Separate the timing gap (cash out before cash in) from the profit hit (the job now earns less).
- Check variation and rise-and-fall clauses before you borrow a dollar.
- Short gaps suit revolving facilities; bigger or repeated gaps need a sized working capital loan.
- Lenders want a completion plan and the date of the final claim, not just the shortfall.
- Shorter quote validity and escalation clauses protect the next job.
When a fixed-price job runs over budget, you’re short on cash before the final payment arrives, and the job will make less than you planned. Treat those as two separate problems. The timing gap is a working capital question. The lost margin is a pricing question. Borrowing helps with the first; it only hides the second.
This has been a real issue lately. The ABS June quarter 2026 producer price figures showed input costs for house construction rising sharply. The main drivers were raw materials, freight and fuel, plus supply chain disruption linked to the Middle East conflict. Metal products, electrical gear and plaster all rose, and costs went up in all six capital cities the ABS tracks. If you quoted a job in autumn and you’re buying materials in spring, you’ve probably felt it.
What actually happens to your cash when a fixed-price job overruns?
On a healthy job, progress claims roughly keep pace with what you spend. You pay suppliers and subbies, claim the stage, get paid and carry on. The business only funds a small, predictable gap.
When costs jump, that rhythm breaks. You’re paying more for every order, but the claims are fixed by the contract. Each stage leaves you a little further behind, and the gap peaks just before the final claim, which is often the slowest payment of the lot because it waits on handover, defects and sign-off.
Meanwhile, the rest of the business keeps running. Wages, vehicle costs and the next job’s deposit don’t wait. That’s why one overrun can squeeze a business that’s otherwise perfectly sound.
Is it a cash problem or a profit problem?
Both, usually, and it pays to measure each one.
| Question | What it tells you | What fixes it |
|---|---|---|
| How much more will it cost to finish? | The total extra spend | Variations, renegotiation, repricing |
| How much will I still receive before completion? | Cash coming in to offset it | Progress claims, retentions released |
| When is the final payment due, realistically? | How long the gap lasts | Working capital sized to that date |
| What does the job now earn overall? | The profit hit | Absorbing it, or recovering part of it |
| Is this one job or several? | Whether it’s a one-off or a pattern | A short facility, or a bigger fix |
The amount to borrow is the peak shortfall: remaining costs, minus the payments you’ll get before completion, plus a buffer for further price rises and a late final payment. It’s almost never the same as the total loss on the job.
Check the contract before you borrow
Before you borrow a dollar, reread the contract. Many building and fit-out contracts have clauses that deal with exactly this situation: variations for changes in scope, provisional sums and prime cost items that move with actual costs, and sometimes rise-and-fall or escalation clauses. Some trades also have site delays you can claim for.
None of this is a lecture about law. It’s about money. Every dollar you can recover through the contract is a dollar you don’t need to borrow and repay. If you’re not sure what your contract allows, a quick review by whoever drafted it is cheaper than months of repayments.
Then talk to the client, in writing. A clear explanation, with supplier price notices attached, sometimes gets a partial adjustment even where the contract doesn’t require one, particularly with repeat clients who want the job finished well.
Which working capital fits a cost blowout?
It depends on the size and length of the gap. business.gov.au describes an overdraft as best for short-term cash gaps, not long-term funding, and a line of credit as a revolving limit you draw as needed.
- A short gap, cleared by the final claim within weeks: an existing overdraft or business line of credit is usually enough. Draw, finish, get paid, clear it.
- A larger or longer gap on one job: a working capital loan with a set term gives you certainty and a clear exit. Unsecured options are typically $5k to $500k, sized on turnover and bank statements.
- Several jobs hit at once, or a big gap: a property-secured facility, from $20k to $5m, can carry the business through a rough patch while repriced work flows through.
Want to talk the numbers through with someone who sees trades businesses every day? Start a short enquiry. There’s no credit check when you first enquire.
What does this look like on a real job?
Illustrative example. A commercial shopfitter signs a $400k fixed-price fit-out for a retail tenancy, quoted in March with a ten-week program. By the time joinery and electrical materials are ordered in July, prices for aluminium framing, cabling and board have all moved. The shopfitter’s revised cost to complete is $60k higher than planned.
The contract allows a variation for a client-requested change to the shopfront, worth $15k. That leaves $45k of extra cost. Two progress claims of $80k each are still due before practical completion, but they’re already earmarked for subbies and suppliers. The final claim of $40k lands about six weeks after handover.
The shopfitter works out a peak shortfall of about $50k, including a buffer, lasting around three months. Their existing overdraft is only $20k and is needed for day-to-day costs. They take a short working capital loan of $50k, finish on time, and clear most of it when the final claim and retention come in. The job still makes a small margin rather than the one they planned, and every quote after that carries a 30-day validity and an escalation clause on metals and electrical.
What will a lender want to see?
Lenders are comfortable funding a business through a bad job. What they need to see is that the job will be finished and paid, and that the business can carry the repayment if the final claim is slow. Expect to be asked for:
- the contract and the current payment schedule;
- a short cost-to-complete summary, with supplier quotes or price notices;
- any variations submitted and their status;
- recent business bank statements and BAS;
- your pipeline of other work and how it’s priced now.
If you’re in construction or a trade, lenders will also look at licensing and how your industry is usually paid. Our builder business loan and electrician business loan pages cover what lenders look at for those trades, and the industry finder shows the common concerns for 70+ industries.
How do you protect the next fixed-price quote?
A few changes make a big difference:
- Shorten quote validity. Thirty days, not ninety, when materials are moving.
- Add escalation clauses for volatile items. Metals, cabling and fuel-heavy freight are the usual suspects.
- Lock in prices early. Where you can, order or reserve key materials as soon as the contract is signed.
- Price the payment terms. A job with a slow final claim needs more margin than one that pays weekly.
- Keep a buffer facility in place. A revolving limit set up in a calm month is far easier to get than one requested mid-crisis.
Job nearly done but cash running short?
Getting a fixed-price job over the line while costs keep rising is one of the toughest spots in business, and it’s one of the most fixable when the work itself is solid. What matters is sizing the gap properly and getting the right facility in place before the next supplier invoice.
The enquiry takes about 60 seconds, and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so your phone won’t start ringing off the hook. A real person who understands progress claims and final payments reads your situation and calls you. Please fill in the form accurately, including the real shortfall and when you expect to be paid, so we can match the right option first time.
Frequently asked questions
Can I get a loan to finish a job that's lost money?
Often, yes, if the business overall can carry the repayments and the job will be completed and paid. Lenders look at the whole business, the completion plan and when the final payment lands, not just the loss on one contract.
Is it better to use an overdraft or a working capital loan for a cost blowout?
If the gap is short and will be cleared by the final claim within weeks, a revolving facility like an overdraft or line of credit is usually a good fit. If it's larger, longer or affects several jobs, a working capital loan with a set term gives you a clear repayment path.
Should I stop work until the client agrees to pay more?
Only if your contract allows it and you've taken advice. Stopping work without a contractual basis can put you in breach. Check your variation, delay and rise-and-fall clauses first, then talk to the client in writing.
How much should I borrow to cover a cost overrun?
Add up the remaining costs to finish, subtract any progress payments still due before completion, and add a buffer for further price rises and slow payment. The answer is the peak shortfall, not the total loss on the job.
Will lenders worry that my business underquoted?
They'll ask about it. A single job hit by an industry-wide price jump is easy to explain. Repeated losses suggest a pricing problem, so show what you've changed in your quoting.