The work is done. The invoice is thirty days out.
Agencies, consultancies, law and accounting firms, IT shops and staffing companies bill for people's time and wait for the client to pay. The people are paid every two weeks regardless.
The problem
A services firm sells hours, and hours are paid for before they are billed. A large client on net-60 terms, a retainer that starts next quarter, a project that pays on milestones: each is fine on the ledger and hard on the bank balance.
Growth makes it worse before it makes it better. Every new engagement means hiring ahead of revenue, and the bigger the client, the longer the terms. A firm can double its book and run out of cash doing it.
Funders see clean, predictable revenue and professional management, which is why services firms tend to get looked at seriously, banks included. What matters is showing the contracts and the receivables clearly.
- How you get paid
- Invoices on net-30 to net-90; retainers and milestones
- Where the gap is
- Payroll and contractors ahead of the invoice; hiring ahead of growth
- What tends to fit
- A line of credit, SBA and bank loans, revenue-based financing
How we help
A line sized to the receivables
Draw against outstanding invoices to make payroll and repay as clients settle. You pay only on the days it is out.
Longer money for growth
Hiring ahead of a new contract or opening a second office suits a term loan or an SBA loan, and services firms are the files banks like.
Receivables presented properly
We show funders the contracts, the aging and the client mix, so the file reads as the steady business it is.
What usually fits
Which one, or which two, depends on the file. These are the ones we reach for first with professional services.