The UK is undoubtedly a world leader when it comes to entrepreneurship and according to the CIC (Creative Industries Council), the UK creative economy comprises jobs in the creative industries and creative jobs which are in non-creative organisations (e.g. design or marketing teams within manufacturers). It comprises an estimated 3.12m jobs or 1 in 11 of all UK jobs.
However, for creative agencies, cash flow is one of the biggest problems they face. According to Campaign, nearly half of the payments made to creative industry companies were late in 2018, leaving the industry over a billion pounds out of pocket at any given time.
Creative agencies that complain about cash flow problems can usually be broken down into two categories:
Aside from waiting for clients to settle overdue invoices, another factor to cause crunches in cash flow is if agencies aren’t continually pitching new clients. A lack of cash flow is quite likely to be a reason that businesses cannot take on new clients or be open to new opportunities.
Cash in the bank is required to launch new campaigns, purchase supplies, pay salaries, hire more personnel and more. Agencies, unfortunately, experience highs and lows in sales, ultimately damaging cash flow.
How to Fix Your Cash Flow
Never stop sending out proposals and marketing your agency. Even when times are good and money is flowing in, you should be seeking more revenue. A business that isn’t growing is dying.
Furthermore, convince your clients to pay monthly retainers for regular services. In most cases, you’ll earn less per hour, but the sustainable and predictable income will make operating and growing your business much smoother.
What type of cash flow problems can Invoice Factoring solve?
Within the creative industries, Invoice Factoring can help to solve a range of common cash flow problems that they commonly experience. Including:
Late payments are one of the biggest problems facing growing businesses today. Rather than waiting for 60, 90 or even 120 days to be paid, invoice factoring frees up the money tied up in invoices so businesses can continue to operate and grow.
Most business owners think that all growth is good, but rapid growth can actually bring hindering problems to a business and most agencies can’t keep up. Growing sales too quickly or getting a single large order with payment terms of 30, 60 or 90 days can lead to a serious cash flow problem. Invoice factoring solves this problem by freeing up the cash from sales almost immediately to support future growth.
Long lead times
Invoice factoring helps to alleviate cash flow problems during long lead times, particularly within fashion or retail, by freeing up money as soon as invoices are issued. This method allows businesses to take on new orders and continue to grow.
>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?
Populous World is an Invoice Finance provider that unlocks working capital for UK businesses.
Bridging your business’s cash flow gap is something that Populous World excels in delivering, providing you with the funding tools to grow and sustain your business.