From around £10,000 to £500,000+Larger facilities available in suitable cases
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In short
Invoice finance works for accountancy firms whose fees are billed to limited companies and other businesses: a provider advances most of each unpaid invoice and releases the balance, less charges, when the client pays. It rarely covers unbilled work in progress or fees owed by individuals, so many practices use a revolving credit facility or a term loan sized on recurring fees instead. Lenders focus on lock-up, client spread and the share of income on monthly fee plans.
This page is for practice owners, partners and finance managers whose firm is profitable on paper but short of cash between doing the work and banking the fee. Smart Funding Solutions is a broker, not a lender: we approach invoice finance providers, professions lenders and other funders on our panel of 300+ lenders, for facilities from around £10,000 to £500,000+, with larger facilities available in suitable cases. For every other reason accountants borrow, start at our accountancy practice loans hub.
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A provider advances a percentage of your eligible business invoices and releases the balance when each client pays. You keep credit control, and clients are not normally told. It suits larger firms billing companies on standard terms, and the facility grows as billing grows. The trade-offs are a minimum term and notice period, regular ledger reporting, periodic audits and a service fee on top of the charge on money drawn. Our invoice finance guide explains factoring and discounting in full, and our invoice finance comparison guide shows how to compare quotes like for like.
02
Funding single large engagements
If the issue is one sizeable piece of work, such as a transaction support assignment or a large R&D claim billed on success, selective invoice finance can fund that invoice alone once it is raised, without tying the whole ledger into a facility.
03
A revolving facility for the busy season
A revolving credit facility gives the firm a limit to draw in November and December and repay in February to April as bills are paid. Interest is charged on the drawn balance, and the limit is usually set on turnover and recurring fees rather than on individual invoices, so it covers WIP and personal tax debtors that invoice finance leaves out. Some facilities carry an arrangement or non-utilisation fee, and most need personal guarantees.
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A working capital term loan
Where lock-up has lengthened permanently, perhaps because the firm has grown or moved clients from annual bills to monthly plans and lost the upfront receipts, a working capital loan repaid over several years fixes the structure rather than the season. Lenders that assess professional practices will often look at recurring fee income when sizing an unsecured business loan.
How the process works when you enquire
You send the aged debtor and WIP reports, accounts and bank statements, and tell us when the gap bites.
We work out which part of the ledger is fundable and whether invoice finance, a revolving facility or a term loan fits the pattern.
We approach suitable providers on our panel and set their offers side by side, including minimum terms, notice periods and guarantees.
The provider carries out its own checks, which for discounting includes a ledger review, and makes the decision.
It is free to enquire; any broker fee is disclosed separately before you proceed.
The accountancy cash cycle through the year
A compliance job passes through four stages before it pays anyone's salary: time is recorded against the client, it sits as work in progress (WIP) until the job is finished, a bill is raised, and the client pays when it suits them. Partners call the total of WIP days and debtor days "lock-up". In most firms it is not constant. It swells in a predictable pattern:
October to January: personal tax returns and accounts for 31 March and 30 June year-ends are being prepared, overtime and contract staff are being paid, and much of that time will not be billed until the return is filed.
February and March: bills go out in a rush after the self-assessment deadline, just as clients are paying their own tax, so many settle their accountant last.
Project work: due diligence, R&D tax claims, forensic assignments and valuations can run for months and are often billed at milestones or on completion, sometimes to a single large client.
Growth: a new manager or a block of clients taken on adds cost from day one, while the fees they generate arrive a cycle later.
Making Tax Digital for Income Tax: quarterly updates for sole trader and landlord clients (see HMRC's Making Tax Digital for Income Tax guidance) spread work across the year, but onboarding and software set-up are often done before the new fee plans are billed.
None of these is a sign of a weak firm. They are timing gaps, and the right funding depends on which part of the ledger the cash is sitting in.
Illustration: a practice at the January peak
Illustration only, with hypothetical round numbers. A firm billing £1.2 million a year reaches the end of December with £300,000 of unbilled WIP and £200,000 of debtors. Of those debtors, £120,000 is owed by limited company clients on 30-day terms; the rest is personal tax and sole trader work. An invoice discounting provider would look only at the £120,000, and would exclude anything disputed or long overdue, so the advance would be a fraction of the cash tied up. A revolving facility of around £150,000, drawn in December and cleared by April as the January bills are paid, would match the actual gap more closely and cost nothing in interest while undrawn, subject to any non-utilisation fee. The right answer for a firm with the same fee income but mostly corporate clients could be the reverse.
Risks and cheaper fixes to try first
Every form of fee funding costs money, and the cheapest cash is usually already inside the practice. Before borrowing, look at billing on account for long jobs, moving more clients to monthly fee plans, requiring payment before accounts are filed or returns are submitted, and chasing the oldest business debtors. Business clients can be charged statutory interest on late payment under the late commercial payments rules, although most firms use the right sparingly to protect relationships.
The funding-specific risks are worth weighing honestly:
Whole-ledger facilities can be hard to leave early, and fees continue while the contract runs.
A revolving facility that never returns to zero after the spring is funding a loss or a pricing problem, not a timing gap.
Guarantees and invoice warranties put the principals personally on the hook if clients do not pay.
General information only. Every lender has its own criteria, and all finance is subject to status.
Which fees a funder will advance against
Invoice finance lends against a debt: an invoice for completed work that the customer is obliged to pay. Much of an accountancy practice's value never takes that form, or takes it in a form providers dislike. The table is a general guide to how funders tend to view each part of the fee ledger; each provider sets its own eligibility rules.
Part of the ledger
How funders tend to view it
Invoices to limited companies and LLPs for completed work
The strongest part. Usually eligible for invoice discounting if the client spread is reasonable.
Fees owed by individuals for personal tax work
Usually excluded from invoice finance, because the debtor is a consumer and the invoices are small and numerous.
Monthly fee plans collected by direct debit
Not invoice finance security, but strong evidence of recurring income that a term lender or revolving facility provider can rely on.
Unbilled WIP
Not an invoice, so not fundable by invoice finance. It can support the case for a revolving facility sized on the seasonal pattern.
Disputed, credited or long-overdue fees
Normally excluded, and a high level of write-offs reduces what is offered on the rest.
So a practice with a corporate and owner-managed business client base can often use invoice finance well, while a practice dominated by personal tax and sole trader clients will usually find a different product fits better.
What our clients say
I manage the VFO department at an accountancy practice and contacted Simon on behalf of a client whose unique situation made him appear unsuitable for finance. I had a chat with Simon and he got straight onto the case and found a fantastic finance deal which allows my client to take his business to the next level. Finance that appeared unattainable was sorted within a short period of time.
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FAQs
Questions clients ask
Can a sole practitioner accountant use invoice finance?
It is possible, but providers often set a minimum annual turnover and a small practice with mostly personal tax clients may not have enough eligible business invoices. A small revolving facility or term loan is often the more practical route. Borrowing of £25,000 or less by sole traders and small partnerships can be regulated consumer credit, which brings additional protections.
Will my clients know I am using invoice finance?
With confidential invoice discounting, clients normally pay into an account in your firm's name and are not told. Factoring, where the provider collects the debts, is visible to clients and is rarely chosen by accountancy firms for that reason. Selective finance varies by provider, so ask before you sign.
Is borrowing against aged fees the same thing?
Related but different. Aged debt funding looks at the value and age of a professional's outstanding fees and lends against the whole picture, rather than advancing against each invoice. It is most common at the Bar; our guide to aged debt funding for professionals explains how lenders read a fee ledger.
We are buying a block of fees. Should the WIP be funded separately?
Usually the purchase and the working capital are better considered together, because the acquired clients will need work done before their first bills are paid. Our pages on block of fees finance and accountancy practice acquisition finance cover how lenders assess the purchase itself.
Do partners have to give a personal guarantee for invoice finance for accountants?
Often, yes, although the form varies between funders. Many ask the partners, members or directors for a personal guarantee or an indemnity, which typically covers losses if invoices turn out to be disputed, already paid or not genuine rather than ordinary late payment by clients. Read the wording carefully and ask how it is capped. Some owners also look at personal guarantee insurance to limit their exposure.
WIP and disbursement funding gives a law firm cash to cover the gap between recording time, billing it and being paid, and to…
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