Cash Flow Finance for Professional Practices
Lock-up, renewals
and seasonal peaks.
Professional firms are often short of cash at predictable points in the year. Each of those points has its own kind of funding, and the right one depends on where the cash is stuck.
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The picture
Profitable on paper. Tight in the bank.
Many professional practices are profitable and still short of cash. The reasons are structural: work is done long before it is billed, bills are paid long after they are issued, and some of the largest costs of the year arrive as single payments. Tax is charged on profit, not on cash received, and VAT can fall due on invoices clients have not yet paid.
The result is a cash cycle with predictable pinch points: the PII renewal, practising certificates, VAT quarters, corporation tax or partners’ self-assessment, and seasonal peaks such as the accountants’ January workload. None of these is a sign of a failing practice, but each can put pressure on payroll and drawings if it is not planned for.
The answer is rarely one overdraft. Working out where the cash is actually tied up, whether in unbilled WIP, unpaid bills, disbursements or an annual premium, points to the funding that fits. Some of it can be released; some of it can be spread; and some of it can be avoided altogether with better billing and credit control.
The journey, step by step
- 1
Work done, not yet billed
Value sitting in WIP and disbursements, especially in law firms carrying counsel’s fees, expert reports and court fees while matters run.
- 2
Billed, not yet paid
Debtor days and aged debt. Receivables-based funding can release cash from invoices while clients take their time to pay.
- 3
Annual renewals
PII premiums and practising certificates. Spreading them into monthly payments keeps a single large bill from emptying the office account.
- 4
Tax and VAT
Quarterly VAT, corporation tax and partners’ tax. Short-term funding can pay HMRC on time and spread the cost over the following months.
- 5
Seasonal peaks
Such as the accountants’ January cycle, when staff costs peak ahead of the fees they generate.
Things to consider
Fix the cycle, not just the gap.
Measure lock-up
Know how many days of fees sit in WIP and debtors, and track it monthly. It is the single most useful cash-flow figure in a professional firm.
Bill and collect sooner
Interim billing, payment on account, clear engagement terms and prompt disbursement billing can release cash that no lender needs to provide.
Plan the calendar
Renewals and tax dates are known months ahead. Arranging funding early widens the options and avoids expensive last-minute decisions.
Use the right product
Short-term needs suit short-term funding. Using long-term debt to cover a recurring seasonal gap can store up problems.
Preparing the case
What lenders will ask about.
- Aged debtor and WIP reports, and how they have moved over time
- Recent accounts, management accounts and bank statements
- The timing and size of renewals and tax payments
- Existing facilities and how they are used
- For law firms, case mix, billing arrangements and disbursement levels
We are a broker, not a lender. We help you prepare this, search the market for lenders whose criteria fit, and manage the process through to completion. How it works →
- Whole of market accessHigh street banks, specialist and private lenders.
- Specialist understandingLenders who understand how practices earn and grow.
- Your case, properly presentedStructured and put to lenders suited to it.
- With you to completionFrom the first conversation to funds arriving.
In our clients’ words
“I contacted them to apply for a VAT funding loan. Simon responded within half an hour of my request and was able to confirm funding within a 24 hour period. It was the first time I have had to apply for funding owing to a short-term cash flow problem, and he made the journey so easy. Kind and highly efficient: I would highly recommend them for a fast, professional service.”
Questions
What owners usually ask.
What is lock-up, and why does it matter?
Lock-up is the time between doing work and being paid for it, usually measured as WIP days plus debtor days. The longer it is, the more cash the practice needs to fund. Our guide to reducing lock-up explains how to measure and improve it.
Is an overdraft the best way to manage cash flow?
It can suit day-to-day swings, but it is repayable on demand and may not cover large renewals or tax bills. Many practices combine a working capital facility with specific funding for PII and tax.
Can PII and VAT be funded together?
They are usually funded separately because they fall at different times and suit different products, but we can look at both in the same review.
We’re already behind with HMRC. Can you help?
Tax funding is designed for bills that are current or coming up. If a payment is overdue, speak to your accountant and to HMRC about a payment plan, and tell us at the outset. See our guide to funding tax and VAT.
Knowledge Hub
Read the guides.
Reducing Lock-Up in Professional Firms: How to Measure It and Bring It Down
How to measure lock-up in a professional firm, what drives it, the practical steps that reduce it, and where finance bridges the gap rather than fixing it.
Read the guide →WIP Finance for Law Firms: Funding Work in Progress, Disbursements and Lock-Up
Why profitable law firms run short of cash, the funding options that bridge work in progress and disbursements, and what lenders look at when assessing a firm.
Read the guide →Funding Your PII Renewal: Professional Indemnity Premium Finance Explained
How premium finance spreads the cost of professional indemnity insurance, what to check before signing, the regulatory context for solicitors, and the alternatives.
Read the guide →Let's talk
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