How agencies can keep the cash coming in and the bank balance healthy

Getting clients to pay on time, managing staff salary costs and expenses, eradicating scope creep and carefully negotiating banking and credit facilities are just a small part of what it takes to stay in the black.

Tamara Alesi, CEO, Mediaplus: “Achieving a balance between client satisfaction, cost management and cash flow is vital for agency financial health. Our key strategies encompass regularly assessing expenses to identify cost-saving opportunities without compromising service quality, establishing transparent payment terms to ensure fair and consistent practices, avoiding situations where we act as a bank for clients and maintaining strong lender relationships and exploring flexible financing options to support evolving needs and long-term goals. As an independent agency, we differentiate ourselves with a retainer versus percentage of media fee model. We believe agencies should not be incentivized to spend clients’ investments but act as collaborators, making the best recommendations to drive business growth. This model ensures fair compensation for our work and builds trust, as our plans are not motivated by profit margins on media spend. By focusing on these aspects and remaining agile, we build a robust financial foundation that fosters growth and stability for the agency.”

Kelly Jepp, chief financial officer, Special London: “Navigating the financial landscape for agencies requires a blend of proactive management and strategic foresight. While external pressures are inevitable, a well-managed internal environment can safeguard stability. Advocating for commercial fairness by negotiating equitable terms with clients. Referencing industry standards such as IPA/Isba and collaborating with procurement teams can establish realistic working practices that reduce financial risks. Building a commercially focused team is essential. Equip client services teams with skills to recognize scope creep and delays, supported by finance leads who foster strong communication, ensuring financial integrity. Investing in the finance function is equally critical. An efficient, well-supported team can deliver timely insights, empowering leadership to make informed decisions during both growth and contraction phases. Adopt a forward-looking approach. Rolling forecasting, scenario planning, and cash visibility enhance preparedness. Finally, building strong relationships with advisors such as bankers and lawyers can provide broader perspectives, extending their value beyond compliance and strengthening your agency’s financial resilience.”

Melanie Washington, principal, head of global contract advisory, MediaLink: “Brands are increasingly aware of the challenges agencies face as intermediaries, but there are some things they can do to alleviate this strain while optimizing operations, specifically with media agency partners. First, more than 95% of contracts we’ve advised on in 2024 include incremental payments tied to project milestones or performance metrics, which better support an agency’s financial growth goals. Tiered payment models with distinct terms for agency fees versus working media dollars can help agencies secure timely compensation while managing other costs separately. In addition to centralized P&Ls, which offer a comprehensive overview of an agency’s financial health, it’s also key to involve finance teams early in the agency-brand relationship. This ensures payment timelines are clearly understood and establishes escalation procedures for unforeseen finance-related issues. Together, these strategies foster a balanced financial environment, reducing cash flow challenges and promoting sustainable operations.”

Chris Woodward, CEO, CTI Digital: “Cash is king: without it, and the good management of it, you simply don’t have a business. It’s obvious, it’s fundamental and it’s often misunderstood. If you’ve worked in a holding company, you’ve probably had the ‘bank’ of Publicis or WPP to smooth over any cash flow blips. If you don’t have this safety net, it’s crucial that you earn your commercial stripes. That, very quickly, teaches you the fundamentals of negotiating good and prompt payment terms with clients, agreeing on your rent and rates well, settling on fair and balanced payment terms with suppliers, maintaining cash headroom and understanding how to work within your banking covenants. Above all, ensure there are no surprises. Control the details, or they will control you. And the moment that happens, you don’t have a business.”

Matt Buckle, managing director, Transmission: “The vast majority of small creative agencies started out of a passion for the industry. It was the love of the creative idea, the energy and buzz of production, the showbiz shininess of it all. And that’s great. That’s why we keep doing what we do. And yet, so many shiny, brilliant agencies have gone under because there wasn’t a solid financial voice in the mix. Cashflow is the biggest killer. Whether it’s through losing accounts, late payers or over-ambitious hiring policies, the risk needs to be managed. Part of why we have been able to grow so well is that we’ve grown sustainably. We haven’t overstretched our full-time roster but kept nimble and dynamic. We try and have a diverse client base and grow with them. We’re with our team, our clients (and our bank balance) for the long run.”

Amy Robertson, chief financial officer, Wooshii: “Wooshii operates as both a mature production agency and a rapidly growing AI-based software provider, making cash management essential for growth and risk mitigation. Production revenue is project-based and, therefore, bumpy, aligning with a typical agency profile. In contrast, our software business offers a more predictable revenue stream, contributing significantly to Wooshii’s growth. As a private equity-backed business, we have significant backing behind us to exploit the market opportunities. However, financial reporting must be extensive and comprehensive to reassure our investors that our funding is optimized to build enterprise value and deliver returns. Key areas include rolling forecasts (short- and long-term forecasts to identify cash needs from production delays, ensuring liquidity to support software development and tactical marketing), milestone payments (production contracts feature milestone-based terms and upfront deposits) and retainer contracts (annual bookings with upfront commitments stabilize revenue and support supplier discounts). SaaS contracts and annual licenses have historically been charged as upfront payments, although we’re moving to usage-based fees for our product Brand Check as we can demonstrate significant optimization improvements of up to 30% on Creator campaigns.”

Bonnie Charette, executive operations director, Hook: “Like many agencies, one of our biggest challenges is balancing the rising costs of attracting and retaining top talent with the pricing pressures our clients face. To address this, we often advocate for retainer-based pricing. This approach offers clients predictable costs, often with volume discounts, helping them manage budgets effectively. For our agency, retainers enable better resource planning and financial forecasting, ensuring stability and growth. But it’s more than just finances. Retainers foster stronger client-agency relationships, leading to efficient collaboration, streamlined workflows and minimized scope creep. This reduces unexpected costs and time inefficiencies for all, especially when deadlines are tight. Ultimately, it’s a win-win where both agency and client thrive.”

Josh Clarricoats, co-founder, Insiders: “When we founded the agency, we knew that financial challenges were affecting many in the industry. So, we set up in a different way that would mean we were less exposed to market vagaries and less reliant on retainers, with low outgoings and overheads from day one. We have small staff numbers and work with expert freelancers to scale up and down – and while retainers would be nice, we aren’t reliant on them or expecting them. We have agile teams that clients can turn on or off and strict 30-day payment terms. Because we work in this more flexible way, we also find that we have fewer payment issues. We grew with no investment and now have a solid six-month runway for the business in just two years.”

Gert Jan Timmer, managing partner, Chuck Studios: “As a production house, forecasting is our biggest challenge. Work can be unpredictable month to month and in quieter times, it’s understandably stressful, but when it’s too busy, margins can be squeezed by freelancers. It’s a bit of a gamble. But as specialists in creative production and strategic consultancy for food and drink brands, we sit in a very niche part of the industry, so we’re confident the gamble will pay off. Some clients will always pay much later than agreed and agencies will always say they can’t pay us for the work already delivered until the client pays them. These challenges are age-old, so we’ve become experts at the balancing act of spending modestly and keeping a healthy balance in the bank.”