Updated September 02, 2026
Quick answer
Model the requirement as weeks of payroll before the first payment, plus mobilisation. A contract billed monthly on net-45 can mean roughly two to three months of wages funded up front before any revenue lands — on top of higher insurance limits, recruitment and uniforms. Size that number before bidding, not after winning.
The Cost of Winning
A larger contract is a cash event before it is a revenue event, and the outflows arrive in a predictable order:
- Higher insurance limits, bound before the start date
- Bonding, where the contract requires it
- Recruitment and screening — advertising, background checks, licensing for new officers
- Training, paid and delivered before the first shift
- Uniforms and equipment for every new officer
- Vehicles where the contract needs patrol coverage
- Weeks of payroll before the first invoice is even issued
The last one dwarfs the rest on a labour-intensive contract, and it is the one most often left out of the model.
Sizing It Properly
The arithmetic is simple and worth doing explicitly rather than by feel.
| Input | What to use |
|---|---|
| Weekly payroll for the contract | Wages plus employer taxes and workers' compensation, not the headline wage |
| Weeks until the first invoice | Your billing cycle — a month if billed monthly in arrears |
| Payment terms | What the contract says, plus how that client actually pays |
| Mobilisation costs | Recruitment, training, uniforms, equipment, insurance step-up |
| A margin for slippage | First invoices are disputed or delayed more often than later ones |
Payroll multiplied by the weeks before payment, plus mobilisation, plus a margin. That figure is the real entry price of the contract, and it is frequently a large multiple of the monthly invoice.
Fund It Before You Sign, Not After
The order matters more than the instrument.
Arranging finance after winning means negotiating under time pressure with a start date already agreed, which is the weakest possible position. Arranging it before means you know whether you can afford the contract while you can still decline it.
Most funders will discuss a facility on the basis of a contract you are bidding for rather than one already signed, particularly where the client is creditworthy — which is the point of factoring against your client's credit rather than yours. Have the conversation at bid stage.
Which Instruments Cover Which Costs
| Cost | Best fit | Why |
|---|---|---|
| Payroll after invoicing starts | Invoice factoring | Scales with billing; no fixed limit to outgrow |
| Payroll before the first invoice | Line of credit | No invoice exists yet for factoring to advance against |
| Insurance step-up | Premium finance | Turns a lump sum into a run rate |
| Vehicles | Equipment finance | Titled and liquid; keeps cash free for payroll |
| Recruitment and uniforms | Line of credit or working capital | Nothing to secure against |
The pattern: anything before the first invoice needs a facility that does not depend on an invoice existing.
When to Decline
Worth saying plainly, because growth is treated as an unqualified good and it is not.
A contract is worth declining when the cash requirement exceeds what you can fund and the shortfall would come out of existing clients' service. Losing a good contract you already hold in order to staff a new one is a bad trade, and it happens.
It is also worth declining when winning it would concentrate too much revenue in one client — which affects your risk and your access to funding, since funders look hard at concentration.
Public-sector work advertised through SAM.gov is worth a particular look on this point: the contracts are large and reliable, and the payment cycles are long enough that the working capital requirement is correspondingly bigger.
Frequently Asked Questions
How much cash does a larger guard contract require?
Model it as weekly payroll multiplied by the weeks until the first payment arrives, plus mobilisation costs and a margin for slippage. On monthly billing with net-45 terms that can mean roughly two to three months of wages funded before any revenue lands.
What costs come before the first invoice?
Higher insurance limits, any bonding, recruitment and screening, paid training, uniforms and equipment, vehicles where patrol coverage is required, and weeks of payroll. On a labour-intensive contract the payroll dwarfs everything else.
Should I arrange funding before or after winning?
Before. Arranging finance after a win means negotiating under time pressure with a start date already agreed. Most funders will discuss a facility on the basis of a contract you are bidding for, especially where the client is creditworthy.
Can factoring cover mobilisation costs?
No, because there is no invoice yet for a funder to advance against. Factoring works from the first billing onward; costs before that need a line of credit, premium finance or working capital.
When should I turn a contract down?
When the cash requirement exceeds what you can fund and the shortfall would degrade service to clients you already have, or when the contract would concentrate too much revenue in one client — which raises your risk and narrows your access to funding.
Sources & Further Reading
- SAM.gov — The federal registration system for contractors - where public-sector guard contracts are advertised and awarded.
- Federal Reserve Small Business Credit Survey — Survey data on how small firms fund payroll and working capital, including approval rates by product.
- US Department of Labor: Fair Labor Standards Act — Federal wage and hour rules, including overtime - the obligations that make guard payroll non-negotiable and time-sensitive.
Figures above describe ranges commonly seen across lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.