Why Cash Flow is King for Scaling Marketing Agencies

By
Isabelle Kenagy
June 2, 2022
Interviewer:
Interviewee:
By
Isabelle Kenagy
June 2, 2022
Interviewee:
Interviewer:
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Why Cash Flow is King for Scaling Marketing Agencies

Consistent and stable cash flow is paramount for marketing agencies because of the cycle of revenue and expenses. To do the work a client needs, agencies must spend money on vendors and equipment. This can include everything from influencers to freelance designers to production equipment. Often, the revenue from a client comes in after these vendors have already been engaged creating a need for stable cash flow. For tips on how to improve your agency’s cash flow, refer to our post on 5 Tips to Improve Cash Flow for Your Marketing Agency.

The bottom line is that you can make more money in the future if you have more working capital under your belt. Below are a few ways in which a stable cash flow can improve and scale your marketing agency.

You can afford the best vendors

In an increasingly competitive market, you’ll want to ensure to your potential clients and partners that you will go above and beyond to differentiate yourself from the competition. In these times, working relationships can only carry you so far. A stable cash flow not only means you can pay your vendors timely but it can also distinguish you in a highly competitive market as a reliable and consistent partner. 

You can develop long-term relationships with the best vendors

Vendors and creators don’t want to work with agencies that take too long to deliver on invoices. If you don’t have a stable cash flow, it becomes difficult to consistently pay out vendors in a timely manner and your long-term relationships with high-quality partners will suffer.

You can get better work from your freelancers

The faster freelancers get paid, the faster they’ll deliver work. With cash on hand, you can pay your freelancers competitively and on time thereby creating a happier working relationship that will translate into better quality work. Freelancers want to work with business partners that treat them with respect, and the best way to do that is to deliver payment in a fair and timely manner, something a consistent cash flow enables. 

You can more easily form long-term client relationships

Speaking of long-term relationships, it is difficult to form long-term client relationships when you are always on the hunt for immediate cash. With a stable cash flow, you can afford to take a slower client project with a longer timeline that will pay off in the long term. If a brand names you their Agency of Record, you won’t always have consistent work, but with a strong cash flow, you don’t have to worry about that. Long-term relationships heighten your agency’s reputation which will pay off for profits and cash flow in the long run. Essentially, you need money to earn money. 

You can adjust your pricing to allow for ad-hoc requests

Many small agencies have very specific pricing packages for very specific services. This is because they can’t handle the risk associated with an inaccurately scoped project. If you have more cash on hand, you are able to set a flexible pricing strategy that allows for ad-hoc requests and further project development that makes your agency more money in the long run.

You can invest in your agency

Cash on hand allows you to invest in your agency and also helps retain and recruit top talent. With the ebbs and flows of the job market, agencies have been getting creative when it comes to retaining their top talent. This could look like increased salary wages and paying out bonuses. You can also afford to invest in the newest marketing technologies, highest quality research studies, and thought-leadership pieces that will set your agency apart. 

We all know the phrase “the rich get richer.” This applies to businesses as well. The more cash you have, the more you can invest in your agency, improve client and vendor relationships, and take on riskier projects with higher returns. All of this will translate into a better reputation and price point for your agency. And, if you're struggling to get that immediate cash, Lumanu’s EarlyPay provides the perfect solution to get your brand invoices paid out immediately. Never stress about client payment terms again and elevate your agency with this accessible cash flow solution. 

Interested in learning  how Lumanu can improve your cash flow? Contact us!