Why busy firms can still run short
Professional services firms sell time and expertise, which means their biggest cost — people — has to be paid long before clients pay for the work. A typical sequence for an Auckland engineering consultancy: staff work through March, the invoice goes out on 31 March, the client pays on 20 April under 20th-of-the-month-following terms, or later if the invoice sits in an approval queue.
That’s four to seven weeks of payroll funded from the firm’s own cash, on every invoice, every month.
What the data says about getting paid
Xero’s New Zealand Small Business Insights for the June 2026 quarter showed small businesses waited an average of 24.1 days to be paid after invoicing, with payments arriving 4.7 days late on average. Those are averages across all industries; firms billing large corporates, councils or government agencies on 20th-following terms often wait considerably longer.
Where firms feel the pinch
- Month-end payroll when a large client’s payment misses its usual run.
- Project ramp-ups — hiring or contracting extra people for a new engagement.
- Milestone billing, where months of work are invoiced in one go.
- Tax dates — GST and provisional tax on invoices that haven’t been paid yet (especially for firms on the invoice basis for GST).
- Growth — every new hire adds to the working capital the firm carries.
How a line of credit helps
A revolving line of credit suits professional services well because the gap repeats every month and clears when clients pay. Draw to cover payroll or contractors, repay when invoices are paid, and the limit is available again next month.
Lines of credit are generally for firms 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.
If you’re buying into a practice, fitting out new premises or need a larger lump sum, a property-secured loan of $20,000 to $1m, secured on New Zealand property you or a supporting party own, may suit better.
Shorten the gap as well as funding it
Funding is one side of the equation. The other is getting paid faster:
- Invoice immediately when work or a milestone is complete, not at month-end.
- Agree terms in the engagement letter, including what happens when payments are late.
- Break big projects into milestones so cash arrives in smaller, more frequent pieces.
- Ask for deposits or retainers on new or larger engagements.
- Follow up early. A friendly reminder a few days before the due date works better than a chase after it.
Our guide to managing debtor days covers practical collection tactics.
Example scenario
Example scenario — illustrative only. A Wellington IT consultancy wins a six-month project with a public-sector agency, billed monthly on 20th-following 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 self-funding and the facility is back to zero.
Pricing
We don’t publish rates. Every facility 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 call to talk through your billing cycle.