The gap between billing and collecting
Firms pay staff every two weeks but often invoice monthly and collect 30, 60 or more days later. Growth makes the gap wider, because new work adds payroll before it adds cash. Roifunder helps accounting firms, agencies, IT providers, consultants, engineering and design firms get funded through our funding partners for hires, technology and expansion.
- Payroll for new staff before their billings are collected
- Software, security and automation projects
- Office buildout or a second location
- A large client engagement that needs added staff up front
- Seasonal peaks, such as tax season for accounting firms
Billable hire payback, ramp included
Monthly contribution from a hire equals billable hours times billing rate times realization, minus the hire's fully loaded cost. Realization is the share of billed time you actually collect. Map the ramp month by month, total the shortfall and see when steady contribution earns it back. Include the collection delay, because cash lags billing.
Monthly contribution = billable hours × rate × realization − loaded monthly cost
Example: a hire with a loaded cost of $8,850 a month bills 110 hours at $150 with 85 percent realization when fully booked, or $14,025. Steady contribution is about $5,175 a month. At 40 percent and 70 percent booking in months one and two, collected billings are about $5,610 and $9,820, so the ramp shortfall is roughly $3,240. Because clients pay about 45 days later, cash turns positive a month or two after that. Illustrative numbers only.
| Month | Booking level | Collected billings | Contribution |
|---|---|---|---|
| 1 | 40% | about $5,610 | about −$3,240 |
| 2 | 70% | about $9,820 | about +$970 |
| 3 onward | 100% | about $14,025 | about +$5,175 |
Software and automation payback
Software pays back through hours saved that turn into billable work or reduced overtime, faster invoicing that shortens collection time, and fewer errors. Count only hours that will really be redeployed. Include implementation time, training and subscription increases in the cost, not just the purchase price.
Example: a $30,000 practice management and automation project saves 50 staff hours a month. If those hours shift to billable work at a $90 collected value, that is $4,500 a month; at a $45 internal wage value, it is $2,250. Faster invoicing that brings collections in 10 days sooner also frees cash. Payback runs about 7 to 13 months before funding cost depending on which value is realistic. Illustrative only.
Office buildout or a second location
A buildout has a long payback and a lasting benefit, so it usually fits a longer-term structure rather than short-term funding. Tie the expected gain to specific added capacity: seats for staff you will hire, client-facing space that supports higher fees, or a location with committed clients. Lease commitments are a separate obligation worth reviewing with your own advisor.
Run the payment math on term loans and compare it with an SBA-backed option if the timeline allows. Before either, check how much funding your firm can afford from its cash flow.
Match the payment schedule to billing
Firms that invoice monthly and collect on net terms usually fit monthly payments better than daily or weekly debits. Retainer clients who pay at the start of the month make monthly payments even more predictable. If payments must be daily, convert them to a monthly figure and check them against your actual collection dates.
For a firm collecting mostly between the 10th and 25th of each month, a payment due on the 1st can land before cash arrives. Ask whether the due date can follow your collection cycle. See daily vs. weekly vs. monthly payments.
When not to fund, and how to apply
Skip funding a hire without a pipeline of work to book them, software without a plan for the hours it frees, or payroll gaps caused by chronically slow collections. If clients routinely pay late, tightening billing and collection terms often does more than funding, at no cost.
Requirements vary by product and funder; many look at time in business, monthly revenue and credit. Some approvals come within a day or two, depending on documents. Many funders review recent bank statements and may ask about receivables. Apply once to compare options.
Frequently asked questions
How do I calculate realization for a new hire?
Realization is the share of billed time you actually collect after write-downs and discounts. Use your firm's own history for similar roles: collected revenue divided by the standard value of hours billed. Apply that percentage, not your full billing rate, when estimating what a new hire will bring in.
Should a firm fund payroll while waiting on receivables?
It can make sense for a specific, temporary gap, such as a large engagement that pays on milestones. If the gap happens every month, the issue is usually billing frequency or collection terms. Fixing those lowers the need for funding and avoids paying a cost to cover a process problem.
Is software a good use of funding for a small firm?
It can be when the hours saved turn into billable work or cut real overtime, and when implementation is planned. Include setup, training and subscription costs. If the freed hours would simply go unused, the savings exist on paper only and will not cover a payment.
What payment schedule suits a firm that invoices monthly?
Monthly payments usually match invoicing and collection cycles best. Daily or weekly debits can pull cash out before client payments arrive. Ask whether the due date can follow your collection pattern, and convert any other schedule to a monthly figure before comparing offers.
Check the hire math, then apply
Compare funding for hires, technology and expansion through our funding partners.
Updated September 14, 2026 · Roifunder Funding Team