Exit from money you're owed: refunds, claims, grants and contracts

Some businesses are owed their way out of a bridge. The money exists and it’s coming: a refund from the ATO, an R&D offset, an insurance payment, a grant milestone, a large contract payment. The only thing wrong with it is the date.

A receivable exit uses that incoming money to repay the bridge. It’s often cleaner than a sale, because nothing needs to be sold. But it comes with its own questions, mostly about how much will actually arrive and when.

Which receivables can repay a bridge?

Receivable	Who decides timing	Main risk to the amount	Read more
R&D Tax Incentive refund	Registration, lodgement, ATO processing	Ineligible spend, offsetting	R&D advance
BAS / GST refund	ATO verification process	Offsetting, adjustments	ATO refund held
Insurance claim	Insurer’s assessment	Excess, exclusions, under-insurance	Insurance payout
Grant milestone	Funding body’s review of reports	Ineligible costs, scope changes	Grant gap
Contract or progress payment	Customer’s approval and terms	Disputes, retentions, late payment	This page
Business sale proceeds	Sale conditions and settlement	Price adjustments	Business sale

What does a lender check about the payer?

• Who owes the money? A government agency, an insurer or a large, reliable customer is a stronger payer than a business in difficulty.
• Is the amount agreed? An accepted claim or approved invoice beats an estimate.
• What process decides timing? Formal processes are predictable but rarely fast. Moneysmart summarises the insurance industry code’s timeframes: updates at least every 20 business days and, except in some circumstances, a decision within four months of the claim. Austrade processes EMDG milestone reports in the order received.
• What could reduce it? Offsetting, excesses, retentions, deductions or disputes.

What reduces an ATO refund?

ATO refunds deserve special attention because two things can change them:

1. Verification. The ATO may retain a BAS refund to check it, for example where a refund is unusually large or it’s the first time a business has claimed one. The ATO says it will tell you within 30 days of lodgement if it has retained your refund, and pays interest on legitimate refunds it retains for more than 14 days. See the ATO’s page on checking refunds.
2. Offsetting. The ATO generally uses credits to pay tax debts on your other accounts, including debts that were on hold, with some exceptions such as amounts under a compliant payment arrangement. Details are on the ATO’s offsetting page.

If your plan relies on a refund, ask your tax agent to confirm what’s likely to be offset before you size the bridge.

Owed a known amount and running short in the meantime? See if that payment can anchor a bridge with a quick enquiry.

How should a receivable bridge be sized?

Conservatively. A useful approach:

• Start with the amount you’re confident of, not the headline figure.
• Deduct anything that could be offset or withheld: tax debts, excesses, retentions.
• Size the bridge so the exit covers it with margin, and plan the rest from trading or another source.

The bridging calculator in “waiting on a payment” mode shows exit cover, which tells you at a glance whether the payment clears the bridge.

An illustrative example

A commercial fit-out company has completed a major project and has an approved final progress claim of $380k, due under the contract’s payment terms in 45 days. It also has $60k of retention held until the defects period ends in 12 months. Its suppliers want paying now for the next job.

The bridge is sized against the approved $380k claim, not the retention. The company takes a four-month term in case the client pays late, and treats the retention as a bonus rather than part of the exit. The bridge is secured over the directors’ investment property. (Illustrative scenario.)

What if the payment is late or smaller?

That’s why the term and plan B matter. If the payment arrives late, a term with buffer absorbs it. If it’s smaller, the balance becomes end debt that needs another exit. Our exit evidence checklist lists what to gather for each receivable type. For smaller gaps without property, see unsecured bridging.

What makes a contract payment a stronger exit?

For businesses waiting on a customer, not a government body, the quality of the receivable is everything:

• An approved invoice or progress claim, not just a completed job.
• Clear payment terms in the contract, with a date you can point to.
• A payer with a good track record of paying on time.
• No disputes about scope, variations or defects.
• Retention treated separately, since it’s often held for months.

If any of these are missing, the payment may still be part of the plan, but it should carry less weight in sizing the bridge. Trade credit insurance or a payment guarantee, where they exist, can strengthen it further.

Get paid now for money that’s already on its way

If the money is owed and the process is under way, the wait shouldn’t hold the business back. Tell us what’s owed, by whom, where the process is up to and what security you have. The enquiry takes about a minute, there’s no credit check when you first enquire, and your details don’t get passed on to a list of lenders. A real person looks at it and calls you.

Please give us the amount you’re confident of and any tax debts or deductions you know about. Accuracy here is what makes a receivable bridge work.

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