The customer’s lender will release the deposit only after work starts
Identify circular funding where a promised customer deposit depends on lender certification after commencement, checking conditions before assuming upfront protection.
Corporate Recovery Partners
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The promised deposit may not be upfront money
The customer says its lender will fund the deposit, but the lender's release is tied to work already completed or another condition not yet met. Clarify the sequence before treating the arrangement as protection against funding the job yourself. A payment called a deposit can still arrive too late to finance the very activity required for its release.
Request a clear explanation and appropriate supporting information about the event needed for the payment. Do not demand unrelated private lending records or assume you are entitled to communicate directly with the lender. Establish who is responsible for meeting the condition and who can confirm it. Keep the customer's promise distinct from a lender approval that has not been verified.
Business.gov.au recommends clear payment arrangements in contracts. Ask your adviser to compare the proposed customer obligation with the stated funding condition. A customer's financing difficulty does not automatically rewrite your agreement, but the practical dependency still matters. Do not accept unclear wording on the assumption that somebody will arrange funds once the crew arrives.
Imagine materials must be bought before installation, while the proposed lender drawdown requires certification of installed work. The contractor expects the drawdown to fund the materials. Those assumptions cannot both operate as described without another funding step. The example does not decide the lender's actual requirements; it identifies the sequence that needs confirmation before the project begins.
Show the cost and timing of work required before the release condition can be met. Ask whether the parties can agree a workable arrangement with appropriate advice. Do not count an informal suggestion of bridging finance as confirmed cash or make false statements about progress to obtain a drawdown. Any revised payment or commencement arrangement needs clear documentation.
Confirm what money is genuinely available for the first commitments and what remains conditional. Keep the receipt and certification milestones visible during delivery. If the plan remains circular, address it before taking further obligations rather than hoping activity itself will unlock funds. The purpose is to understand who finances the first stage, despite the reassuring label attached to the proposed payment.
