Late payments in service based firms - impact and solutions

• Cash flow challenge:  Clients often delay payments, creating a gap between delivering my service and receiving revenue, which makes it hard to cover ongoing business costs.

• Perfect for: Professional service firms such as consultancies, agencies, and legal practices that rely on prompt client payments to manage operational expenses..

Novuna helps service based businesses keep cash flow moving when client payments are delayed, either through our award-winning in-house service or by comparing the market to find the best fit for your business.

We work with providers who understand the pressures service firms face, help you apply, and make sure you get the right deal to keep your business running smoothly.

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Why late payments hit service based firms harder

Service based firms rely on steady client payments to cover salaries, rent, and project costs. When invoices are delayed, cash reserves can quickly drain because there are few physical assets to sell and limited options for generating immediate income.

Common reasons clients pay late

• Internal cash flow issues on the client side
• Long payment terms written into contracts
• Disputes or delays in project sign-off
• Administrative oversights, such as invoices being misplaced or misprocessed

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Strategies to minimise late payments

• Tighten your payment terms: Consider shorter payment deadlines and clear late payment policies in all contracts.
  
• Request upfront deposits: Taking a percentage of the project fee in advance can provide a cash buffer.
  
• Automate invoicing and reminders: Using invoicing software reduces admin delays and ensures timely follow-ups.
• Build strong client relationships: Regular communication and good rapport make clients less likely to deprioritise your invoices.
  

Funding options to bridge payment delays

Short-term finance can help cover expenses while you wait for invoices to be paid. Invoice finance allows you to release cash tied up in unpaid invoices, while a revolving credit facility provides flexible access to funds when needed.

How Novuna Business Cash Flow can help

We work with service based firms to create funding solutions tailored to their cash flow needs. Whether it’s invoice finance, short-term loans, or revolving credit, we’ll help you secure the right option to keep your operations running without disruption.