Factoring for law firms

• Cash flow challenge: Managing cash flow during long settlement periods can be challenging, even for profitable firms.

• Perfect for: Law firms, solicitors, and legal practices that experience delays between billing and payments.

Novuna can help law firms improve untie capital and help with cash flow through tailored invoice finance and factoring facilities, either through our award-winning in-house service or by comparing providers and making sure you have a great deal for your situation.

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What is factoring for law firms?

Factoring allows your firm to release funds tied up in unpaid invoices or billed work by selling those receivables to a finance provider. Instead of waiting 30, 60, or even 120 days for payment, you can access up to 90% of the invoice value upfront, giving you immediate liquidity to manage daily operations.

Once your client or insurer settles the invoice, the remaining balance (minus a small service fee) is released giving you predictable cash flow without adding debt to your balance sheet. For law firms, factoring can apply to billed time, disbursement recoveries, or settlement receivables, making it a practical solution across most areas of legal practice.

Why law firms use factoring

Law firms increasingly turn to factoring to manage the gap between issuing bills and receiving payment especially in complex cases or client-funded work.

Ways in which factoring helps your firm:

• Access cash quickly from completed work without waiting for client payment.

• Fund disbursements, expert fees, and litigation expenses in advance

• Maintain consistent payroll and partner drawings, even during long case cycles.

• Support growth by freeing up cash to invest in technology, recruitment, or marketing.

• Avoid reliance on traditional overdrafts or short-term loans.

For many practices, factoring complements other forms of finance such as invoice discounting, working capital loans, and business overdrafts, creating a complete funding strategy that aligns with the pace of legal work.

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How factoring works for law firms

1. You bill your client, insurer, or third party for completed work.
2. The factoring provider advances most of the invoice value (typically 80–90%) within 24-48 hours.
3. When your client pays, the remaining balance (minus fees) is released to your firm.

This simple, structured process turns delayed payments into accessible cash, allowing your practice to maintain strong cash flow without interrupting client relationships or service delivery.

When factoring is most useful for your firm

• Personal injury or clinical negligence, where settlements can take months or years.

• Conveyancing and property law, where completions may be delayed.

• Conveyancing and property law, where completions may be delayed.

• Corporate and employment law, where staged retainers or billing cycles extend beyond 60 days.

By converting pending invoices into working capital, your firm can continue to take on new clients, fund expert reports, and grow sustainably without relying on overdraft extensions or additional borrowing.

How Novuna Business Cash Flow can help

We can help you unlock the value tied up in client invoices and case settlements to keep your practices running smoothly and seize new opportunities. Our facilities are fast to arrange, flexible in structure, and fully tailored to the unique needs of the legal sector.

Speak to our experts today and we will help you find a great fit for your situation.