What sort of advisor do I need? Any recommendations?

[HornungTheHelpful]

I’ve posted about this before. I’m a barrister (sole trader) and have pre-tax gross annual income between £500 and 600k. My cash flow is rubbish. Have c. £170k outstanding at present - so quite a bit more than 25% of my likely earnings this year. We get paid (almost) everything eventually but it’s how long it takes. I’m only getting between £10-20k a month and sometimes less - sometimes nothing. I have debts - usually taken out at the last minute so interest rates rubbish or credit cards.

In illiquid assets I have equity of c £400k.

cashflow has been particularly bad this year and I’m always running to catch up. I need some advice but all the debt people just want to put you in an IVA and all the others only want to talk investments. I don’t think I need an IVA but I’m not sure and so don’t want to talk to someone whose only interest is putting me in one.

Any ideas who I can speak to/what sort of advisor I need?!

Bloody hell.

I can’t fathom that someone presumably of your intelligence is starting s long thread on mumsnet about this rather than just… contacting your IFA

although… do you even have one?

or indeed know what one is? 😂

And so much for barristers whining about their pay

Op you asked almost precise same question last year. Loads of helpful comments. Just revisit that as no magic bullet.

You definitely need professional advice though Op. and sharpish. As this has been going on quite some time

ok - thanks for the feedback. I’ll go back to that again.

To answer the question, yes I do know what an IFA is. The rudeness was appreciated 👍There just don’t seem to be many if any in the space my finances occupy.

I work in a highly paid specialism. Junior criminal barristers’ pay is pitiful and threatens the integrity of the criminal justice system. If - as it seems - unfair pay is only relevant if you do a low skilled job.

You need an accountant too. And possibly a PA.

I doubt you are unusual. When I did pupillage many moons ago I was told most barristers live in their overdrafts. Professional clients are woeful at paying on time so even in the more highly paid specialisms people end up in this sort of situation.

Are your clerks on the ball chasing outstanding payments? Some are better than others.

Surely the poor credit control is on your clerks. If they aren't doing it, get a rocket up them!

Your Chambers and clerks need to sharpen up their act. Are other barristers in your chambers facing the same issue.

Speak to a diligent accountant who can help with Cashflow, especially VAT and personal expenditure. They can also explain the changes on fiscal accounting. They can work with a mortgage adviser to refinance your debt onto your illiquid assets (assuming they are real property).

I did some of my accountancy training in an insolvency practioner and was fascinated that so many of the clients were barristers. It does sound difficult to manage.

Is it possible to use a factoring company to get an advance on any of the invoices?

You do need an accountant that specialises in your area. I would probably advise liquidating some of the illiquid assets say 50%. Setting up a payment plan for the debts and a regular standing order to your current account for the expenses you need to live on.

Keep the rest in a notice period deposit account. Also try to keep track of how much tax you might need to pay and ring fence that in a different account. Although I imagine you will have paid the advance payments required twice a year by HMRC.

Sorry, assumed by illiquid equity you meant stocks and shares. If it is property then harder to cash out, but maybe an increased mortgage.

Three things that would seem obvious to me, although I don't know if the way your business/finances are arranged are compatible with this, would be to separate your business and personal income and liabilities and pay yourself a regular salary that covers your day to day personal outgoings and hopefully allows money to build up in the business side of things so you can keep taking a wage during times when you're waiting for clients to pay. Make sure you save the right amount for your tax bill, which must be considerable on that income. If possible, don't run up personal debts to aid business cashflow.

You say you are a sole trader. Is this always the way it is for barristers and are there any other ways of working that could work better, eg limited company, partnership?

I assume that you have 'admin'/PA support? You need a good person/people to keep on top of invoicing and effectively chase overdue payments. What are the expected payment terms and how long do clients generally take to pay? If it's 30 days, your people need to be sending reminders on day 31 etc. If they go past 60 days, they tell them legal action will be taken to recover outstanding debts. Make it clear to the people who work for you that this is an important part of their job that they need to be on top of.

If you're very specialist, are you able to pick and choose your clients and tell them that if they want to engage your services for new/ongoing work, they need to pay their outstanding invoices. If you are in this position, do this.

Finally, second the suggestion of using a factoring company. It could well be that 95% of X today is a lot better than 100% of X in 3/6 months' time or however it works out.

any children?

I'm not able to provide any advice here other than to say that I sympathise with barristers. I have a close relation who is a successful barrister and I find the cash flow situation extraordinary.

I don't think you need an IFA. Your issue is that you can't collect on your invoices, isn't it? What is the issue? Do you invoice in a timely fashion? Do you chase periodically? Do you have a process for when invoices fall outside of payment terms? I think you need a virtual assistant with experience in credit control.