Cash flow is the lifeblood of any business, and it's easy to see why: without adequate money flowing into your business, you won't be able to cover your monthly expenses or even expand your business.
For creative agencies, efficient cash flow management is the secret to survival.
As Guy Bauer, founder and creative director at Umault, puts it, efficient cash management can lead to a self-fulfilling cycle of better work, higher fees, and more capacity. This article aims to demonstrate the benefits of efficient cash management, as demonstrated by Bauer.
But first, a quick primer on cash flow management.
What Is Efficient Cash Flow Management?
Cash flow management is the practice of understanding and optimizing the money, cash, and non-cash items flowing into and out of business.
Efficient cash flow management means your business has sufficient cash at all times and it is operating optimally. Some of the best practices for managing cash flows include monitoring your cash flows closely, invoicing quickly, having an emergency backup plan, and using the right cash flow management tools.
Benefits of Efficient Cash Flow Management
Cash flow is the fuel that drives business decisions, and creative agencies should embrace the best cash flow management practices to remain in the business.
One of these practices is utilizing a good financial management tool. Dryrun, a financial management and forecasting tool that gives business owners an instant and unbiased view of the health of their company, is a perfect example of that.
Guy Bauer uses Dryrun to manage cash flow for his creative business and credits the tool for giving him complete visibility into the company's financial health. Dryrun allows him to make strategic changes to the business and manage cash flow more efficiently.
According to Bauer, Dryrun provides an unbiased reality check directly from QuickBooks and helps business owners make data-driven decisions such as hiring and resource allocation. These decisions can help the agency achieve its growth goals and become more competitive, leading to even greater cash flows.
By using robust cash flow management tools like Dryrun, creative agency owners can avoid the downward spiral of over-hiring and taking on too many projects. Better still, they can rest assured that their company's cash flows and cash equivalents are in check.
Rather than worrying about how to meet the monthly obligations, creative agency owners can focus more on things that steer business growth, like marketing and improving the customer experience. Most importantly, efficient cash flow management allows businesses to control spending and work less for more income.
Bauer says that by managing his finances intelligently, he can take on less work and be less busy, leading to a higher billable rate and more capacity. He refers to this as a self-fulfilling cycle, where better work leads to higher fees and more capacity.
How Dryrun Can Help You Better Manage Your Finances
Efficient cash flow management doesn't happen overnight. It's a process that requires planning, hiring, and significant investment in technology.
At the very least, it requires planning and the use of tools like budgeting software, forecasting tools, and financial management tools like Dryrun.
These tools help businesses have complete visibility into their finances, project future cash flows, and see how various scenarios will impact their cash flows, so they can make important decisions about managing their finances.
Dryrun provides a direct connection to the data from QuickBooks, giving agency owners a clear understanding of their business's current and future financial situation. This way, creative agency owners can make informed decisions about cash deployment and ride out the storms of an unpredictable industry.
Wrapping It Up
Cash flow management is essential to the success of any business, and creative agencies are no exception. Using tools like Dryrun, creative agency owners can create a self-fulfilling cycle of success and take control of their financial situation.
With the right tools in place, creative agency owners can achieve the sweet spot of doing the best work at the highest possible price, leading to an upward spiral in their businesses.
Fight 'Feast or Famine’
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Spot the peaks and valleys ahead of time so that you can adjust your capacity, backfill sales, and pick and choose the best projects, generating more money with the same team.
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