Quick answer
Professional services practice finance funds the purchase of, or buy-in to, an accounting, legal, financial planning, engineering, architecture or consulting practice, plus fitout, technology and working capital. Value often sits in client relationships and work in progress rather than hard assets. Ownright Custom Finance arranges practice finance Australia-wide and explains the deal to lenders in terms they understand.
Key points
- Covers practice purchase, partner buy-in, start-up, fitout and technology
- Value is often client base and recurring fees, not physical assets
- Lenders consider fee income, client concentration and handover plans
- Security may come from property or personal assets
- Suits
- Accountants, lawyers, planners, engineers, architects, consultants
- Security
- Practice assets, property and often personal security
- Key issue
- Goodwill, recurring fees and client retention
- Australia-wide
- Yes
What is professional services practice finance?
Professional services practice finance is lending for firms that sell expertise instead of products: accountants, lawyers, financial planners, engineers, architects, surveyors, consultants and similar practices. It can fund buying an existing practice, buying into a partnership, starting a firm, fitting out offices, buying technology or smoothing cash flow while fees come in.
The challenge is that these businesses have little in the way of hard assets. A practice might own computers and furniture, but its real value is in client relationships, recurring fees and the reputation of the people. Lenders who are used to taking security over equipment or stock need to be shown why a practice is worth lending against.
Who uses practice finance?
- Accountants and bookkeepers buying a retiring principal’s client list
- Lawyers acquiring or merging small firms
- Financial planners and advisers buying books or buying in
- Engineers, architects and surveyors starting or growing their own practice
- Senior associates buying equity in the firm they work for
- Consultants needing working capital while large projects are billed
For healthcare owners see medical and dental practice finance, and for animal health see veterinary practice finance.
How do lenders assess a professional practice?
Fee income and recurring revenue. Lenders prefer predictable, recurring income, such as annual compliance work and ongoing retainers, over one-off projects. Tax returns, BAS and financial statements show the pattern.
Client concentration. If a few clients make up most of the revenue, the practice is riskier. A wide, diverse client base looks more stable.
Goodwill and the price. The price compared with annual fees is a common yardstick, but lenders look at the whole picture, including profit and how much is paid for goodwill.
Key-person risk. If clients follow the retiring principal, value can leave the firm. A handover plan, a retained period for the seller and strong staff all reduce that risk.
The buyer. Qualifications, experience, registration and reputation count. Relevant professional standing is typically a baseline, and your own personal position matters because you carry the loan.
Security. With few hard assets, lenders often ask for property or other personal security. Our guide to types of loan security explains the options.
What can the finance cover?
| Purpose | Approach | Notes |
|---|---|---|
| Buying a practice | Business acquisition loan | Goodwill and key-person risk are central |
| Buy-in as a partner | Loan funding your share | Partnership agreement and exit terms matter |
| Start-up | Business loan or secured facility | Lenders want a plan and often property security |
| Technology | Equipment or IT equipment finance | Spreads software and hardware costs |
| Fitout | Fitout finance | See business fitout finance |
| Working capital | Line of credit or term loan | Smooths the gap between work and payment |
Selling or buying a practice may involve professional body rules, client consent and tax questions. Your solicitor and accountant should be involved from the start, and we work alongside them on the finance.
If you have a practice in mind, you can send us the details and we will tell you how it might look to lenders.
What about work in progress and slow-paying clients?
Professional firms often carry large amounts of work done but not yet billed, or invoices outstanding for months. That can strain cash flow even in a profitable year. Lenders may look at WIP and debtor ledgers in their assessment, and some facilities are built around them. A business line of credit or debtor finance may suit a practice that is profitable but short of cash at certain times. We look at the billing cycle and then suggest the product that fits it.
How Ownright arranges practice finance
Ownright Custom Finance is made for situations where standard lending does not quite fit. Trevor Scott’s experience over four decades helps us read a practice the way a lender will, and then present it in the best honest light. We ask about fee income, clients, staff and your plans, then work out how best to finance the purchase, buy-in or growth.
We look beyond the obvious. Some practices suit a bank, especially with strong property security. Others fit better with a non-bank lender that is comfortable with goodwill-heavy deals. We work Australia-wide, and when a bank has declined, we look at why and whether a different structure or lender could make the difference.
An illustration
Illustrative scenario only. An accountant wants to buy a retiring principal’s client list and join it with her existing practice. Most of the value is goodwill, and the retiring principal has agreed to stay on for a handover period. A broker might arrange a loan secured partly by the buyer’s property, with part of the price deferred, and a line of credit for working capital while the new clients are brought across.
How should a handover be structured?
Because so much of a practice’s value is relationships, the way the sale is structured often matters more than the headline price. Common features include a handover period where the seller stays involved, introductions to key clients, a portion of the price tied to client retention, and restraint terms agreed between the parties. Lenders pay attention to these because they reduce the risk that revenue disappears after settlement. A written plan covering who contacts which clients, how files transfer and how staff are retained gives the lender confidence and helps the buyer too. We help line the finance up with that plan so settlement, working capital and any deferred payment sit comfortably together.
What if the practice is run through a trust or company?
That is very common among professional firms. The borrowing entity, the guarantors and the security all depend on the structure, and lenders will want to see trust deeds, company details and who stands behind the loan. Mapping this early avoids delays. Our page on company and trust borrowing covers the basics.
What mistakes should you avoid?
- Paying for goodwill without testing client retention
- Ignoring key-person risk
- Overlooking client consent and professional rules in the sale
- Underestimating working capital after settlement
- Accepting a payment structure that leaves no buffer in a slow quarter
- Not checking tax outcomes with an accountant first
What documents should you have ready?
Have practice tax returns, financial statements, BAS, a breakdown of fees by client or type, work in progress and debtor reports, the sale contract or partnership agreement, your qualifications and personal asset and liability statements. Our guides on getting loan ready and what documents you need for a loan help with preparation.
Sounds like you want to own or grow a practice?
Sounds like you’re looking for professional practice finance, and we can help you buy, buy in or build your own firm. We’re the lending experts at turning goodwill and good clients into a deal lenders will back, so click the button below and see if you qualify.
How it works, step by step
- 1
Step 1
Tell us about the practice, what you want to buy or build and your own background.
- 2
Step 2
We review fee income, client mix, work in progress and the proposed price.
- 3
Step 3
We approach lenders who accept practices where value is mostly goodwill.
- 4
Step 4
Documents are signed and settlement is coordinated with the sale or buy-in.
Frequently asked questions
Can I borrow to buy an accounting or law practice?
Yes, finance for professional practices is available. Lenders look at fee income, the stability of the client base, the price relative to earnings and your qualifications. Because there are few hard assets, security often includes property or personal assets. We help show the practice's recurring income clearly.
How do lenders view goodwill in a professional practice?
Goodwill is usually the largest part of the price, and it cannot be easily sold if things go wrong. Lenders therefore look for strong recurring revenue, a handover plan and additional security. A deposit is common. We discuss how much of the price is goodwill and what that means for lender choice.
What is a practice buy-in and can it be financed?
A buy-in is when a senior employee or partner purchases an equity share in the practice. Lenders usually finance it based on the buyer's income, the practice's earnings and the partnership terms. The agreement setting out how an exit works is important. We can structure finance around that.
Will lenders worry if clients are loyal to the retiring owner?
They often do. If clients follow the individual rather than the firm, the value can leave with them. A planned handover, introductions and a period where the seller stays involved can address this. We help present the transition so lenders see how clients will be retained.
Can work in progress and unbilled fees be financed?
Sometimes. Practices with large unbilled work or slow-paying clients may use working capital, invoice or line of credit facilities. Lenders will want to understand billing cycles and the collectability of fees. We look at which product best matches how your practice gets paid.
Can a sole practitioner or small firm get practice finance?
Often yes, but lenders pay close attention to key-person risk and income consistency. Additional security or a longer track record helps. We discuss your situation openly and look at structures that suit smaller practices, including property-backed options.