Business finance for management consultants

Why consulting cash lags the work

Management consulting is a high-margin, people-powered business, and that is exactly why its cash flow lags its revenue. Value is delivered through senior time, but the costs of delivering it — associate day rates, sub-contracted specialists, travel, accommodation and tooling — are incurred as the work happens. The invoice, by contrast, usually waits for a milestone or phase to complete, and the client then takes their own 30 to 60-day terms before paying. On a longer engagement, weeks of fully-costed delivery can sit as work-in-progress before a single penny is billed.

The bigger and more blue-chip the client, the slower and more procurement-bound the payment tends to be. So a consultancy can win prestigious work, run it profitably, and still find its current account tight mid-delivery — because the team is paid now while the milestone invoice clears later.

WIP, associates and the milestone gap

The strain concentrates in a few predictable places:

• Associate and sub-contractor costs. Flexing capacity up for a project means day rates that fall due quickly, well ahead of the milestone they help deliver.
• Travel and disbursements. Flights, hotels and on-site costs are paid in real time and may only be recharged at the next billing point.
• Long delivery phases. The further apart the milestones, the more WIP the firm carries before billing.
• Procurement-led payment terms. Larger clients impose terms and approval cycles that push payment well beyond the work.

None of this signals a badly run firm — it's the structure of project work. A facility that draws against in-flight delivery and repays when the milestone clears matches that structure precisely.

What consultancies use funding for

Typical, well-judged uses include bridging a delivery phase — funding associate fees, travel and overhead between milestones so payroll never depends on a client's approval cycle; scaling up for a won engagement, bringing in specialists or associates before the first invoice clears; covering pitch and proposal costs for significant opportunities; investing in methodology, accreditation or tooling that supports higher-value work; or smoothing the firm through a gap between projects so the core team is retained for the next mandate.

The common thread is that the cost lands before the milestone invoice. That is the gap short-term finance is designed to bridge — not to fund an engagement that's structurally unprofitable or a client that may never sign off.

Things to weigh before you borrow

Match the finance to the cash event you're bridging:

• Milestone certainty. Is the next billing point contractually firm, with the work on track to trigger it? A facility suits a defined, time-bound gap, not an open-ended hope.
• Debtor quality. Distinguish slow-but-reliable clients from genuine sign-off or bad-debt risks before you borrow against a milestone.
• Term vs. need. If cash returns at a milestone in 8 weeks, a short facility fits; a permanent gap points to a pricing or staging problem instead.
• All-in cost vs. margin. Weigh the full repayable figure against the healthy margin on the work it supports.

This page is educational, not advice on your firm — test it against your real WIP and debtor data.

How company-only finance fits — no personal guarantee

Credicorp lends to your limited company, not to you as a partner or director, and without a personal guarantee. For a consultancy owner that matters: your home and personal assets aren't tied to a facility taken to bridge a delivery phase, and the borrowing reflects the company's position rather than your personal credit file. As an exempt business lender providing working capital — not regulated consumer credit — the focus is on how the firm trades: its engagements, its billing and its record.

Because delivery cash needs flex with the project calendar, the revolving Credicorp Flex line suits the milestone rhythm — draw when associate fees or travel land, repay as the milestone invoice clears, use less when timing settles. For a defined, larger investment, a business loan gives a clear lump and schedule. You can apply online to see what's available.