Why We Need a More Nuanced, Contract-Aware Approach to Receivables Finance
Backed by Trade Credit Insurance — to Fund the SMEs Building Our Future
Working capital is the lifeblood of Australia’s industrial economy. It’s what determines whether a contractor can pay their people, order materials, and keep projects moving.
Nowhere is this more critical than in the sectors shaping Australia’s next chapter — Defence, Infrastructure, Mining Services, and Renewables. Together, these industries are forecast to absorb over a trillion dollars of investment across the next 25 years.
Yet the SMEs delivering much of this work — the backbone of our national capacity — are too often constrained by cash flow. Not because they’re poor operators. Far from it. But because their receivables are trapped in complex progress claim invoicing, assignment restrictions, and slow acknowledgments that make funding difficult.
The result? Viable, performing businesses are being starved of liquidity. Not for lack of capability — but because of poorly structured contracts and a limited understanding of what makes receivables fundable.
🌍 The World Is Moving — and Australia Risks Falling Behind
Across the globe, governments, banks, and financiers are realising the importance of supporting SMEs — giving them the tools to compete for major contracts and tenders.
Back in 2018, the UK introduced the Business Contract Terms (Assignment of Receivables) Regulations, prohibiting anti-assignment clauses in many SME contracts.
Why? Because the UK recognised that receivables are assets — and when you restrict their assignment, you restrict access to capital.
It was reform built on pure commercial sense:
👉 Unlock the asset. Unlock the capital.
Sadly, Australia hasn’t followed suit. The issue has been compounded by the lack of an industry voice since DIFFA was disbanded after the GFC. Without a collective voice, receivables finance hasn’t been part of the policy or technology conversation — leaving us behind global best practice.
The outcome? Progress claim receivables remain tangled in Security of Payments Act (SOPA) processes, ambiguous contracts, and unclear rights of assignment. That’s a real tragedy — not just for SMEs, but for the economy and the industry itself.
We need reform and awareness. With the right legal and contractual foundations, we can unlock capital against earned, certified value — and get money flowing where it’s needed most: into the hands of the SMEs doing the work.
💡 The Global Opportunity
Globally, Receivables Finance exceeds USD 3.5 trillion every year — and it’s still growing. Markets with clear frameworks and assignment-friendly contracts are seeing double-digit growth because funders have confidence.
Australia’s participation remains modest. Not because our businesses don’t need funding — they do — but because the receivables themselves aren’t structured in a way that makes them easy to fund.
The industry also faces legacy perceptions — progress claims seen as “too hard” or “too risky” — based on old experiences, not modern realities. Today, we have automation, digital certification, and stronger statutory protections. We just need the structures to match.
If we standardised progress claim frameworks with:
✅ Deemed acceptance
✅ Short dispute windows
✅ Assignment-friendly clauses
…we could mobilise billions in new working capital for the SMEs powering Australia’s growth.
🇦🇺 Why It Matters
Over the next 25 years, these sectors will define Australia’s prosperity:
🏗 Infrastructure — over $500 billion in long-term projects
⚡ Renewables — hundreds of billions in energy transition investment
⛏ Mining Services — critical to both exports and future minerals
🛡 Defence — over $330 billion under AUKUS and the Integrated Investment Plan
Yet the SMEs doing the heavy lifting face:
⏳ Extended payment terms
📄 Progress-based billing
🚫 Contracts that restrict assignment
All of which choke cash flow.
The problem isn’t performance — it’s structure.
Progress claims can and should be fundable assets — if we get three things right:
1️⃣ Contract clarity – assignment rights and short dispute periods
2️⃣ Proof of debt – certified claims, timestamped submissions
3️⃣ Risk mitigation – Trade Credit Insurance
🤝 The Symbiotic Solution: Receivables Finance + Trade Credit Insurance
Receivables Finance (RF) and Trade Credit Insurance (TCI) are made for each other. Together, they create a self-liquidating, scalable funding model built on earned value — not bricks and mortar.
For SMEs:
- RF can unlock 80–90% of certified progress claims
- TCI provides security if a buyer defaults or delays payment
Together, they:
✅ Turn uncertain progress claims into financeable assets
✅ Replace directors’ assets with contract-based collateral
✅ Provide confidence that even if a principal defaults, payment is protected
For Funders:
- Insured receivables mean lower credit risk
- Coverage for insolvency and protracted default
- More diverse, scalable portfolios
It’s a win-win: SMEs gain cash flow and protection. Funders gain insurable, risk-managed assets.
🧱 The Path Forward: Creating Fundable Progress Claims
To make progress claims truly fundable, we need three pillars:
1️⃣ Contract Reform
- Follow the UK’s lead on assignment freedoms
- Introduce deemed acceptance and defined dispute timeframes
2️⃣ Process Discipline
- SOPA-aligned claims under the Security of Payments Act
- Digital evidence packs and timestamped acknowledgments
- Certified proof-of-debt structures
3️⃣ Insurance Overlay
- Trade Credit Insurance naming funders as loss payees
- Embedded within Receivables Finance facilities
With these in place, progress claims move from “too hard” to fundable, insurable assets.
🎯 A More Nuanced Approach
It’s time for funders, insurers, and policymakers to move beyond rigid balance-sheet thinking. When structured properly, progress claim receivables represent earned value — verified by contract, backed by insurance, and aligned with national priorities.
This isn’t innovation for its own sake. It’s a return to traditional commercial fundamentals:
💡 Finance that supports enterprise
💡 Lending that rewards performance
💡 Capital that fuels national ambition
🚀 Simplify. Insure. Fund.
Australia’s future will be built by SMEs. Their success — and our economic resilience — depend on timely cash flow, contractual clarity, and risk mitigation.
By modernising receivables finance, reforming contracts, and linking finance with insurance, we can:
✅ Unlock billions in working capital
✅ Strengthen supply chain resilience
✅ Accelerate infrastructure, renewables, and defence delivery
It’s time we recognised progress claim invoices for what they truly are — earned value — and funded them accordingly.
About Thane Commercial Pty Ltd
Thane Commercial Pty Ltd specialises in flexible working capital solutions for Australian SMEs.
If you’d like to explore financial options tailored to your business needs, please visit www.thanecommercial.com.au or contact:
📧 Neil Tunstall — neil.tunstall@thanecommercial.com.au
📧 Kevin Melville — kevin.melville@thanecommercial.com.au
📧 Simon Walker — simon.walker@thanecommercial.com.au