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Cash Flow Concerns? 8 Things Your Agency Probably Isn’t Doing

 Ah cash flow. It’s not just a phrase accountants throw around casually: it’s actually the blood that pumps around your agency’s veins and dictates how much tangible money is coming into (and going out of) the business. It’s that important because without cash, you can’t pay suppliers, overheads or your own employees.

Unfortunately however, we often come across agencies who are struggling with cash flow, leading to some major growth and maintenance issues for the business. This cash flow struggle comes about as a mixture of poor financial controls and more than a few bad habits.

But never fear! We’re here to throw a spotlight on what your agency probably isn’t doing – and what it could be doing instead – to get that cash pumping around the business again. Let’s dive right in, shall we?


1. You’re Not Charging Up Front

There can be a habit in digital and creative businesses – especially in smaller agencies, eager to impress and grow their brand’s reputation – to charge clients at the very, very end of the project, or sometimes in a monthly amount. One of the reasons this is a bad idea is that for however many weeks and months your team is beavering away on that client’s project, the agency isn’t being paid. Instead, you’re relying on a large payday at the end…which doesn’t always go according to plan. If a client reneges on their payment obligations, or has to delay paying for a legitimate reason, your business is left short with no cash coming in.

Try this:

  • Before any work commences – and we really do mean any work – make sure you invoice between 25-50% of the project’s cost (and get paid for it)
  • Set specific milestones within the project for when it’s time to invoice again – usually in increments of 25% (or smaller amounts more often if it’s a particularly big project)
  • No matter what the project is, don’t hand over the keys to the kingdom until the final invoice is paid. It sounds harsh for a mere 25% of the value, but if the client delays payment or doesn’t pay at all, then you’ve made a loss on the project

The result should be well paced payments providing a steady income for the business – and you get some reassurance in knowing that the client has to pay you to get their hands on the final product.

2. You’re Not Controlling Fee Schedules

Maybe you’ve already got a fee schedule worked out for your clients and they’re aware that there’s a charge to be paid before any work starts. Great! But are you maintaining adequate control of that fee schedule to get paid on time?

Try this:

  • Set up a direct debit with software such as Go Cardless or Directli in order to ensure invoices are paid on time without either party needing to make any extra effort
  • What’s more, using such a tool gives you more control than a standing order would. That means if the amounts change month on month, you can make alterations without the client having to traipse to the bank to change details on their side of things

‘But what if a client doesn’t want to sign up to a direct debit?’ I hear you ask. If that’s the case, you have to think really hard about if you actually want to work with them. After all, if they’re not willing to use a system which makes sure they pay on time, every time, then it begs the question of whether they intend to pay on time at all.

3. You’re Not Automating Follow Up

Hands up if you’ve spent many an afternoon emailing and calling clients to remind them that their invoice is now overdue.


Thought so. This game of cat and mouse is costing you time, resources and so much patience – and eventually you may even give up on chasing that invoice, in which case you’ve lost out on payday too! If you haven’t set them up on a direct debit system for whatever reason, then it pays to at least have processes and controls in place to forewarn/remind clients that invoices need paying.

Try this:

  • If you’re on Xero, take advantage of the invoice reminder feature to have automatic emails sent out at different intervals reminding those pesky late payers that it’s time to cough up
  • Got an honestly forgetful client? Use the same feature to set up regular reminders a few days before an invoice is due to keep the date fresh in their mind

Not only does this loosen the chokehold on your cash flow that late invoices and their inevitable chasing has, but it also helps to condition clients into better habits, and keeps them well aware of when their payments are due. Everybody’s a winner!

You’re Not Expensing The Right Stuff

A major pitfall in business – and a very common reason for cash flow underperformance – is the terrible habit of putting everything on expenses. Aside from the fact that it’s not legally possible to expense everything from client dinners to holidays, it’s also a highly irresponsible habit to form. Without keeping a firm handle on your expense claiming, you run the risk of using up all of the business’ cash reserves – and you need those to pay suppliers, overheads and most importantly, your team. It’s time to reign in the spending!

Try this:

  • Research what you can and can’t claim as an expense. Although this may differ between different territories, there are a few unanimous no-no’s, such as holidays, shopping sprees and weddings (more common than you think)
  • Set sensible limits on expenses that can be claimed by your team
  • Record these expenses in Xero to keep a track of what’s being spent and keep a digital copy of receipts

Getting to grips with the do’s and don’ts of claiming expenses is absolutely crucial in protecting your agency’s finances – and with a little restraint and knowhow, you can save your cash flow a tremendous shock!


You’re Not Addressing Productivity

As we’ve all heard being said a thousand times in the business world, time is money. But no matter how tired you are of hearing the age old adage, it’s accuracy should never be underestimated. Digital/creative agencies should be particularly wary of how much their time is costing because it not only forms part of their costing structure, but also dictates how many additional projects can be taken on. Too much time spent procrastinating or focusing on smaller pieces of work is inevitably going to limit how much money you can actually make – and that’s a big hurdle for your cash flow to overcome.

Try this:

  • Use a powerful online project management system and time tracking tool such as WorkflowMax (we love ‘em) to track your team’s time and streamline processes across the agency for maximum efficiency
  • Assess how much time you and your team are spending on any one task or project and measure that against how much your time is worth. In WorkflowMax, generating a timesheet report can be an easy way to do this.
  • Adopt an agile methodology and cut down on wasted time to free up the potential for taking on new projects

Once you’ve realised the cost of all those wasted hours, you’ll definitely find the motivation to streamline – especially when it means you’ve got the opportunity to develop new products and services in that spare time. But what if your agency is already being as productive as it possibly can be and cash flow is still struggling?

You’re Not Charging Enough

If you’ve got clients paying on time and your team working at full steam, but cash is still an issue, then it makes sense to next investigate your fees. The dangers with charging too little is that you’re making too little – and that potential clients might overlook you in favour of a bigger or more experienced agency who knows their worth.

Try this:

  • Take into account your team’s time, talent and successes - as well as overheads and direct project costs - to create a new pricing structure which is both fair and sufficient enough to give your cash a healthy boost

If one or two clients are put off by the price increase, don’t be disheartened – you’re always free to offer loyal older clients a discount or let the relationship naturally end there. In their place, you’ll find other clients who are both willing to pay, and who feel your experience and skills justify the price.

For more handy advice, check out:

You’re Not Securing Retained Work

Are you only chasing the long projects and the larger paydays in the hopes of raking in the big bucks? Well you could be doing your cash flow a major disservice. Focusing only on major, sporadic projects doesn’t guarantee a regular income for your agency, and makes the job of generating more work even harder.

Try this:

  • Upsell recurring services to current clients
  • Include a retainer service post-project completion – for example, website maintenance or continued social media marketing coverage
  • Develop and promote smaller, recurring services aimed at newer clients

Trying this course of action not only ensures a smoother ride for your business through the darker months, but it also gives your employees and suppliers a whole lot more confidence that they’ll get paid on time!

You’re Not Paying Invoices When Due

PING. A new invoice from a supplier has just arrived in your inbox. Do you a) pay it immediately or b) pay it when it’s due? If your answer was the former, then you’ve fallen into an all too common trap.

Paying an invoice as soon as you get it, as opposed to within a timely manner on or before the due date, means you’re funding your supplier’s business whilst depriving your own of funds. Can you guarantee you’ll still have the cash to cover surprise bills and staff wages after paying invoices straight away? Not always – which is why you should make the most of the 30 days.

Try this:

  • Reverse our earlier advice and pay regular suppliers via a direct debit service. This provides a set date on which money will be drawn from the account to pay the invoice
  • Always confirm the due date and pay when you have the provisions to cover all other outgoings (but still pay on time)

Although you may think it’s useful paying so quickly, eventually suppliers may come to expect early payment every time you engage their services – which can cause more than a little friction if they start to base their own cash flow forecasts on that fact, only for you to pay ‘late’ (i.e. on time).


Hopefully, you’re feeling a bit more positive about handling your cash flow concerns now. It all starts with asking yourself what you’re doing and not doing to help cash to move into your business more easily, and once you’ve started putting these measures into place, you can expect a healthy agency in no time!

Manchester-based My Accountancy Place brings a fresh, modern approach to accounting, specialising in support for digital and creative agencies. Find out more: