Hiring capital: paying new staff before they pay for themselves

Why does hiring create a cash gap?

From day one, a new employee costs money: wages each pay run, super, workers compensation, a laptop or tools, software licences, uniforms. Their revenue starts later. A tradesperson may be billable within a week. A salesperson might take three to six months to close enough business to cover their cost. In between, the business funds the difference.

That ramp-up period is the real thing you’re financing. Not the whole salary for the year — just the stretch until the hire pays their own way.

How do you work out the hiring gap?

1. Full monthly cost of the hire — salary, super, workers compensation, equipment, software, onboarding.
2. Expected monthly revenue they’ll generate, month by month, as they ramp up.
3. Cumulative gap — add up the shortfall each month until revenue overtakes cost.
4. Buffer — add a margin, because ramp-ups rarely run to plan.

Month	Cost of hire	Revenue from hire	Monthly gap	Running gap
1	$9,500	$0	$9,500	$9,500
2	$9,500	$3,000	$6,500	$16,000
3	$9,500	$7,000	$2,500	$18,500
4	$9,500	$11,000	—	Recovering

Illustrative figures only. In this example, about $18,500 plus a buffer funds the hire through to break-even.

Which capital sources suit hiring?

• Line of credit — the most natural fit for ongoing or staged hiring. Draw as each pay run lands, repay as the hire becomes productive.
• Short working capital loan — for a single hiring round with a known payback.
• Invoice finance — when you’re hiring to service a new B2B contract, the invoices from that contract fund the wages.
• Property-secured capital — for big hiring rounds, such as staffing up a new site, where larger amounts are needed quickly.

What changes with Payday Super?

From 1 July 2026, Payday Super requires employers to pay super much closer to each pay day rather than quarterly. For a growing team, that means the super cost of every new hire leaves the account within days of each pay run. Factor it into your monthly cost, not as a quarterly afterthought. Our Payday Super working capital guide explains the cash flow effect.

When to hire ahead of growth

Hiring before the work arrives is a calculated risk. It tends to pay off when:

• you have contracted or highly likely work in the pipeline
• your current team is turning down work or making mistakes from overload
• the role takes a long time to recruit, so waiting means losing months

It’s riskier when the growth is hoped for rather than visible. In that case, staged hiring — and funding — reduces the downside. Our growth capital page covers staging in more detail.

An illustrative example

A specialist accounting practice wins two large clients starting in six weeks. It needs two senior hires now so they’re trained in time. The firm opens a line of credit sized to about four months of their combined cost. It draws each fortnight, then repays steadily once both clients are billed monthly. By month six, the line is close to zero. (Illustrative only.)

Hiring for a confirmed start date? Tell us the timing.

Keep the hiring cash plan honest

• Use your own history of past hires for ramp-up timing
• Include the cost of the manager’s time spent training
• Review the plan monthly; if ramp-up is slower, adjust before drawing more
• Keep payroll and super dates mapped against customer receipts

Contractors, casuals or employees?

How you add capacity changes the cash flow pattern:

• Contractors are often paid per invoice and may be easier to scale up or down, but check the rules on whether a worker is genuinely a contractor — the Fair Work Ombudsman has guidance.
• Casual employees offer flexibility for uncertain workloads, with casual loading in their pay.
• Permanent employees bring commitment and stability but a fixed weekly cost, leave accruals and longer notice obligations.

Many growing businesses start a new function with casual or contract help, then convert to permanent roles once revenue is proven. That staging also staggers the funding need.

Recruitment costs

Don’t forget the cost of finding people. Recruitment agency fees, job advertising, time spent interviewing, onboarding, background checks and equipment can add up — sometimes to several weeks of the new hire’s salary. Include them in your hiring gap calculation.

Keeping staff through a slow patch

Sometimes the reason to borrow isn’t a new hire but keeping a good one. If work dips for a few weeks between contracts, losing a skilled employee can cost far more than funding their wages until work picks up — especially in trades and specialist roles that are hard to recruit. A line of credit is well suited to this kind of short, temporary gap.

Building the team?

The right person, hired at the right time, is one of the best investments a business can make. Asking what capital is available doesn’t involve a credit check, and your enquiry won’t be passed around a list of lenders — one real person looks at your hiring plan and calls you back. Please give us accurate figures for current turnover and the cost of the hire, so we can work out the right facility straight away. See if your business qualifies.