Working capital for professional practices: the right facility, not just a loan

Not always. A business loan is the right product if the need is for a defined lump sum with a clear repayment plan and a specific purpose. For ongoing working capital gaps driven by billing cycle timing, a revolving credit facility is usually more appropriate because you draw what you need and repay as fee income arrives, paying interest only on what is outstanding. For practices with a high volume of discrete invoices to business clients, invoice discounting is often cheaper and more flexible than a loan because the facility grows with the fee book. We will tell you which product is right for your specific situation rather than recommending the one that is easiest to arrange.

Yes. Confidential invoice discounting allows a practice to draw against outstanding fee notes without the arrangement being visible to clients. Collections continue to be made in the practice's own name through its own bank account. The discounting provider is not disclosed to clients, and client relationships are managed entirely by the practice. The majority of invoice discounting arrangements for professional services businesses operate on a confidential basis.

Disbursement funding is a product specifically available to solicitors to cover the gap between paying third-party costs on a client's behalf (court fees, search fees, counsel fees, expert report costs) and recovering those costs on completion. It is distinct from invoice finance in that the underlying asset is the recoverable disbursement rather than an invoice for the practice's own fees. Not all lenders offer it, but those who do understand the solicitors billing cycle in detail. If you are a solicitors practice with significant disbursement outgoings, this is worth exploring as a standalone facility.

It affects the documentation required and the personal guarantee structure, but not the range of products available. Partners in a general partnership have joint and several liability, which lenders typically treat as equivalent to a personal guarantee from all active partners. LLP members have limited liability and lenders usually require a personal guarantee from the designated members. The facility agreement will need to reflect the partnership structure accurately, and we will make sure the documentation is correct for your specific arrangement.

Not necessarily. The suitability of invoice finance depends on whether you can issue discrete invoices to identifiable business clients for completed work or defined milestones. Project-based billing that produces clear invoices with agreed payment terms can work well. Retainer arrangements where fees are drawn monthly are less suited to invoice finance and a revolving facility is usually more appropriate. We will review your billing structure and recommend the product that fits it rather than forcing an unsuitable facility.