Updated 2026-05-19

Professional services factoring

Law firms, consulting practices, engineering firms, and other professional service providers deliver work before clients pay, and payment terms of net 30 to net 60 are common in commercial engagements.

Cash flow pattern

Professional work is delivered and billed before clients pay. Slow-paying commercial clients and milestone billing cycles create gaps between work completion and cash receipt.

Typical invoice documents

• Engagement letter or statement of work
• Invoice referencing completed work
• Client acceptance or sign-off confirmation
• Aging report

Common factoring fit

May fit consulting, engineering, staffing, or other professional service firms billing commercial or government clients for completed, non-contingent work. It works less well when billing is contingent on outcomes, when client contracts restrict assignment, or when retainage is material.

Contract clauses to check

• Anti-assignment language in client engagement letters and government contracts
• Retainage provisions and how they affect the net amount collectible on funded invoices
• Invoice eligibility criteria for work-in-progress versus completed deliverables
• Concentration limits and credit approval for individual commercial or government clients

Industry-specific risks

• Engagement letters with anti-assignment clauses can make specific client invoices ineligible without consent.
• Government contract invoices may be subject to assignment restrictions or set-aside requirements.
• Milestone billing creates invoices that depend on acceptance, which may not be confirmed at the time of factoring.

What factoring does not solve

• Factoring does not solve cash flow gaps caused by contingency billing where payment depends on outcomes.
• It does not remove anti-assignment restrictions from existing client contracts.
• It does not address slow payment from government clients operating under appropriations or approval cycles.