Why can a busy firm still run short of cash?
Professional services firms sell time and expertise, so their largest cost — people — has to be paid long before clients pay for the work. Take a Melbourne engineering consultancy: staff work through March, the invoice goes out on 31 March, and under 30-day end-of-month terms it isn’t due until 30 April. If it sits in a client’s approval queue, payment slips into May.
That’s four to seven weeks of salaries and super funded from the firm’s own cash on every invoice, every month. Before the invoice is even raised, there’s work in progress — hours recorded but not yet billed. Together, WIP and debtors make up what many firms call lock-up: fees earned but not yet in the bank.
What does the data say about getting paid in Australia?
Xero’s Small Business Insights for the June 2026 quarter showed Australian small businesses waited an average of 22.9 days to be paid after invoicing, with payments arriving 6.0 days late on average. Those are averages across all industries and invoice sizes.
At the large-client end, the Payment Times Reporting Scheme requires businesses with $100 million or more in revenue to report how quickly they pay small suppliers. The regulator’s January 2026 update found the time taken to pay 95% of small business invoices had risen to 64 days, from 58. For a firm whose best clients are big corporates, that tail is where cash gets stuck. It’s worth checking a prospective client’s published payment times before agreeing terms.
Where do firms feel the pinch?
- Payroll and super when a large client misses its usual payment run — and, since 1 July 2026, super is due within seven business days of each payday rather than quarterly.
- Project ramp-ups — hiring or contracting extra people for a new engagement.
- Milestone billing, where months of work are invoiced at once.
- BAS dates — if you account for GST on an accruals basis, you owe GST on invoices issued, even if the client hasn’t paid. Our GST timing guide explains the cash and accruals options.
- Growth — every new hire adds to the working capital the firm carries.
How does a line of credit help?
| Situation | Usual fit |
|---|---|
| A monthly gap between payroll and client payments | A revolving line of credit |
| An occasional large gap, such as a slow government payment | A standby working capital facility you draw only when needed |
| Buying into a practice, a fit-out or a larger one-off need | A property-secured loan of $20,000 to $1m |
A revolving line of credit suits professional services because the gap repeats every month and clears when clients pay. Draw to cover payroll or contractors, repay when invoices are settled, and the limit is available again next month. Lines of credit are generally unsecured, for firms usually trading six months or more, with limits based on turnover and business bank statements. Weaker credit is considered, and decisions are sometimes made the same day.
Property-secured loans are a lump sum rather than a revolving facility, secured on Australian property you or a supporting party already own. No financials or tax returns are needed for the initial assessment.
How can you shorten lock-up as well as fund it?
Funding covers the gap. Getting paid faster shrinks it:
- Bill promptly when work or a milestone is complete, rather than waiting for month-end.
- Set terms in the engagement letter, including what happens when payments are late.
- Break large projects into milestones, so cash arrives in smaller, more frequent amounts.
- Ask for deposits or retainers on new or larger engagements.
- Follow up early. A reminder a few days before the due date works better than a chase after it.
- Review WIP weekly. Unbilled time is the quietest form of lock-up.
Our guide to debtor days and payment claims covers practical collection tactics.
How do we present a professional firm to a lender?
A consultancy’s statements often show steady payroll going out and client receipts arriving in uneven lumps. On their own, those lumps can make a healthy firm look stretched. We explain who your major clients are, their usual payment habits and how much work is already contracted, so the lender sees a firm with reliable fees on a delay rather than one short of work.
Example scenario
Example scenario — illustrative only. An IT consultancy in Canberra wins a six-month project with a federal agency, billed monthly on 30-day terms. It needs two additional contractors from week one. The directors draw on a line of credit to pay the contractors for the first two months, then repay as monthly invoices are settled. By month four the project is paying for itself and the facility is back to zero.
How is pricing worked out?
We don’t publish rates. Every loan is priced on your firm’s individual circumstances, and we look for the sharpest option available for your situation.
Keep payroll calm
Start the 60-second enquiry. It’s free and doesn’t affect your credit score. A lending specialist will contact you to talk through your billing cycle.