Options For Funding

Peter Thorpe explores the funding routes available to partners of professional firms.

Partners in professional firms have traditionally used two methods to finance their firms: injecting funds as capital and leaving in the firm undrawn tax reserves and profits from previous years.

Obstacles to partner financing

Historically, capital account balances have remained broadly fixed with additional funding requirements being satisfied by the cashflow thrown off from increasing profits. However, with declining profitability and clients paying later the result has been depleted current account balances. This has led to pressure on cashflow and the need to consider alternative or additional sources of financing from third parties.