Finance for firms that sell time and expertise

Add your average WIP days to your average debtor days and you have your lock-up — the number of days of the firm's own money invested in unbilled and uncollected work at any moment. For many firms that's two to three months of revenue, permanently. It behaves exactly like an interest-free loan the firm has made to its clients, funded by the partners. Naming it that way clarifies the finance question: should working capital carry part of that load instead of partner drawings?

Working-capital facilities and invoice-based funding both address lock-up, in different ways. A revolving facility smooths the monthly rhythm and flexes with WIP cycles; invoice finance releases cash against issued bills, suiting firms with strong corporate debtors and disciplined billing. Neither substitutes for tightening the lock-up itself — better billing cadence is the cheapest funding there is — but they stop growth being rationed by collection speed. Most firms end up using both levers together.

The partner buy-in is the signature transaction of professional life: a senior practitioner acquiring equity worth several years of salary, at precisely the career moment when mortgages and school fees peak. Dedicated funding approaches exist — lenders familiar with firm structures will lend against the equity's income stream and the incoming partner's earnings, often with the firm's cooperation on documentation. Structured well, the buy-in largely funds itself from the profit share it purchases.

Succession is the same transaction seen from the other side. Retiring partners need their capital out without destabilising the firm; incoming partners need funding without impossible personal strain; and the firm needs the transition financed so it never distorts operating cash flow. Planning the funding architecture early — years early, ideally — is what makes generational change orderly, and it's a conversation worth having with a specialist well before it becomes urgent.

Growth in a firm means salaries ahead of fees. A new senior hire may take six to twelve months to cover their cost; a new service line longer; a lateral team arrives with salaries certain and a client following merely probable. Working capital and unsecured business lending both serve this build phase, letting the firm carry the investment without starving partner drawings — provided the facility is sized to a realistic ramp rather than the pitch-deck version of it.

Lenders assess firms differently from asset-heavy businesses, and often favourably: recurring client relationships, professional indemnity discipline and partner-level accountability read as quality. What they want to see is the pattern — stable or growing fees, sensible drawings, and a use of funds tied to revenue rather than lifestyle. A firm that can show its pipeline the way it would show a client its own advice generally finds the lending conversation shorter than expected.

Firms do buy things: fit-outs when leases renew or offices consolidate, technology refreshes, boardroom and meeting infrastructure, occasionally vehicles. Fit-out finance follows the same lease-tenure logic as any premises investment — terms comfortably inside the period you're certain of — and equipment facilities keep technology refresh cycles from arriving as cash-flow shocks. In general terms, GST-registered entities may claim GST on such purchases, with treatment depending on structure; your accountant should confirm, particularly where partnerships and service trusts are involved.

The premises-ownership question surfaces here too, often through the partners' own structures rather than the firm itself — an area with real complexity and one to plan with your accountant and adviser rather than improvise. From the firm's side, the practical point is simpler: every facility, from fit-out to buy-in funding, draws on the same partnership cash flow, so the portfolio deserves to be structured as one considered whole rather than accumulated one urgent decision at a time.