Cash Flow Guide for Professional Services Firms in Australia

The professional services cash flow trap

Professional services firms - accountants, lawyers, consultants, architects, engineers - have a deceptive cash flow profile. Revenue looks healthy on paper, but it's locked up in two places: work-in-progress (WIP) that hasn't been billed yet, and debtors who haven't paid yet. You can be profitable and still cash-poor.

Where cash gets stuck

• WIP: You do the work in March, bill in April, get paid in May. Three months of staff costs funded before cash arrives.
• Debtor days: B2B clients routinely pay in 30-60 days. Some stretch to 90. Your staff get paid weekly regardless.
• Hiring ahead of revenue: You win a new client and need to hire immediately. The revenue comes in over months but the salary starts now.
• Seasonal peaks: Accountants are slammed February-October. Revenue piles up but cash follows later. Marketing and hiring costs come upfront.
• Software and tools: Annual subscriptions for practice management, CRM, research tools - all paid upfront.

How an overdraft fits

A business overdraft bridges the gap between doing the work and getting paid for it. Draw to cover payroll during a high-WIP month, repay as invoices are collected.

We recently funded a $91K overdraft for a finance broker and $98K for an accounting firm - both for hiring, marketing, and growth capital.

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