The purchase price buys the business. Working capital keeps it running while money moves through it. In NDIS services the gap between paying staff and receiving funds can be significant, and buyers who ignore it can find themselves short of cash in the first month.
This article is general information only. Your accountant, lawyer and lender should advise on your specific transaction.
Purchase price versus working cash
Think of two separate budgets:
- Acquisition funds — the price, stamp duty (if applicable), adviser fees and finance costs
- Operating funds — cash to pay wages, rent, insurance and suppliers until revenue under your ownership arrives
Lenders typically assess both. Our guide to financing an NDIS business purchase covers the acquisition side.
Why NDIS cash timing matters
Planning an Acquisition?
Work through our free buyer due diligence checklist, including working capital and settlement items.
In a typical scenario a provider pays workers weekly or fortnightly (check the actual payroll cycle), while income depends on how services are claimed and paid — through the NDIA portal, plan managers or self-managed participants. Each has different timing, and rejected or delayed claims extend the gap. Payroll is not optional; late wages damage staff trust at exactly the moment a new owner needs it.
Illustrative cash timing example
This is a hypothetical example with simple assumptions, not a recommended reserve.
Assumptions: fortnightly wages of A$40,000; claims submitted weekly; plan-managed invoices paid on average around three weeks after service; the buyer does not receive the seller's pre-settlement receivables.
| Week after settlement | Wages paid (A$) | Receipts from post-settlement services (A$) | Cumulative payroll-only position (A$) |
|---|---|---|---|
| 1 | 0 | 5,000 | +5,000 |
| 2 | 40,000 | 15,000 | −20,000 |
| 3 | 0 | 20,000 | 0 |
| 4 | 40,000 | 25,000 | −15,000 |
This is a payroll-only illustration: it excludes rent, tax, superannuation, insurance and other expenses, and ignores timing within each week. It is not a recommendation for a total cash reserve. Under these assumptions the business needs roughly A$20,000 of its own cash in the first fortnight. Change the assumptions — a larger payroll, a claiming backlog, a transition to new portal access — and the number changes. The point is to model it, not to adopt a rule of thumb.
Receivables and liabilities
Settlement documents should state who keeps money for services delivered before completion, and who pays costs incurred before completion. Common items include:
- Unpaid claims and invoices for pre-settlement services
- Accrued wages, superannuation and payroll tax
- Supplier invoices and prepayments (rent, insurance, software)
- Refund or repayment obligations arising from past claims
Employee entitlements
How leave balances and other entitlements are treated depends on the sale structure, whether employees transfer, and the particular entitlement. The Fair Work Ombudsman explains that treatment depends on the circumstances of a transfer of business, and recommends getting advice. Do not assume all entitlements automatically transfer — or that none do. Price adjustments for accrued liabilities are negotiated with your advisers.
Working capital targets in the contract
Some agreements set a target level of working capital at completion, with a price adjustment if the actual figure differs. The definition — which accounts are included and how they are measured — is negotiated. A vague definition invites dispute.
Transition risks that stretch the gap
Several events around settlement can lengthen the time between delivering a service and being paid:
- Portal and claiming access — if the buyer operates under a different ABN, new registration and portal arrangements may be needed before claims can be made in the buyer's name
- Service agreement updates — participants may need to agree new arrangements with the incoming entity, and they remain free to choose another provider
- Plan manager set-up — plan managers may need new supplier details before paying invoices
- Payroll system changes — moving employees to a new payroll system can create a one-off timing mismatch
Each of these is manageable when planned. Build a week-by-week cash forecast for the first three months and update it with actual receipts.
Questions to ask in due diligence
- What are the average days between service delivery and payment, by funding type?
- Are there claims currently rejected or on hold?
- How will portal access and claiming work during transition to your ownership or entity?
- What entitlements are accrued, and how will they be treated?
Working capital is one part of a full financial review; see how to analyse the financial statements of an NDIS business.
Our free buyer due diligence checklist includes these items. If you want help structuring an acquisition, see our NDIS business buying service.
