What do you like about managing cash flow with Clients & Profits? A recent survey asked: What do you like about managing cash flow with Clients & Profits? Their answers explain why so many shops use it as their one, and only, agency software. Unify cash flow information from various G/L accounts in an easy-to-read Cash Flash window. Easily email Cash Flash totals (with no rekeying of information) to designated persons. Create, track , and analyze budgets within your user-defined chart of accounts. Bill clients quickly and easily at any time during the month using prebill, estimate, retainer, and progress invoice types that require no rekeying of information. In one easy-to-use window, auto-pay dozens of vendor invoices through a user-defined due date so no invoice is paid before it is due. How do you compare? 86% of shops analyze their cash flow 71% say the A/R aging report is the C&P fea- feature ture that has most helped in improving cash flow (and if you like this report, try the Client Invoice Aging report. See pages 4-5 to read more about it.) 75% say their A/R terms are 30 days yet only 25% say their A/R collection is 30 days or less (Shorten the leash: 25% of shops have terms of 10 days or less!) Shops who wait to pay to their vendors until being paid by their clients: 40% 68% of shops send out invoices more than once a month (an easy way to improve cash flow when you're using Clients & Profits!)
Continued from previous page Some managers predict variable costs using a percentage of job cost, while others use an average quantity per job. Crunch some numbers from past years' data to decide which predictive model works best for you. One you've framed a budget, fine-tune it annually (or even quarterly if you're growing). Over time you'll have a crackerjack model. "I use Clients & Profits financial statements and subsidiary reports for my budget's base," says Roxanne. After revising it annually for five years she says, "Man, do I have a good workbook on budgeting for advertising!" Watch revenue indicators Predicting revenue is harder since many factors are outside the shop's control. Besides monitoring sales, keep an eye on things that affect your revenue sources. For example, if you're heavy in B-to-B advertising for the construction industry, watch housing starts, mortgage rates, and civic legislation. Two good indicators for the economy in general are the consumer price index (the change in how much consumers pay for stuff) and the gross national product (the value of goods and services produced by a country). While you don't need to sit on indicators and jump when they do, economic acuity helps you better plan your business cycle and identify new business targets. How to measure cash flow Your shop's cash flow is a good indicator of its financial strength, and you can measure it with tools built right into Clients & Profits. The Balance Sheet, Cash Flash, Cash Flow, and Budget Analysis reports are great starting places. Ratios like A/R Turnover and Days Sales Outstanding are also helpful. "Every Friday I run the cash flow report and e-mail it to top management," says Suzanne Conklin, VP/controller at Lancaster, PA-based Howard Miller Assoc. "I want them to know what's going on." However you decide to measure cash flow, run some numbers to get a set of base figures. Set your plan in motion, then run the analyses again to see how you're doing. The payoff: improved cash flow When it comes to improving cash flow, look at both payables and receivables. (You'll find more tips on how to improve cash flow throughout this newsletter.) Focus on improving collections by including payment terms on invoices, working with signed estimates or contracts, and, when necessary, going after delinquent accounts.		"We use the white hatblack hat method for collections," says Rey Scott, comptroller at Kich & Company in San Antonio, TX. "Because our owner deals with the client, she wears the white hat. I wear the black Judith Hector is the director of marketing for Clients & Profits. She coedits the quarterly newsletters. hat and get tough if the situation calls for it." Move earned income from work in progress to your bank account by billing more frequently. Clients & Profits includes many billing options like progress, estimate, multi-job, media, and retainer billing. Your staff can easily flag jobs that have reached a billable stage using a billing status code on the job ticket. Set up billing status codes for estimate, partial, or media billing, for example, then change the status code when the job is ready to bill. Changing the status code triggers the automatic e-mail to A/R, letting them know that a job is ready for invoicing. It's a great way to effortlessly increase billing frequency. Bill for big expenses up front so you don't carry a big liability on your books (or stress out about collecting it). "With media, we request prepayment prior to the space or broadcast close date," says Dawn Jaworski, controller for Gabriel deGrood Bendt LLC in Minneapolis, MN. "If we don't get payment before the close, we cancel the buy." Also, be sure to track and bill for all costs, like travel and photocopies. Plan ahead for vendor expenses with POs, IOs, and BOs -- then hold the vendor to the committed amount. Also, use auto-pay in Clients & Profits so checks are automatically generated on the date you want to pay them (subject to manual proofing and approval, of course). If possible, mail checks on Friday to earn interest on your funds over the weekend. Complete the cycle There are dozens of ways to increase your cash flow, and only a few are mentioned here. But however you go about improving it, give equal attention to inflows and outflows. Doing a good job of managing cash flow requires using every tool in your professional toolbox, from schmoozing vendors for looser terms, to motivating staff for better productivity, to getting the most out of Clients & Profits. Let Clients & Profits handle the bulk of day-to-day cash flow management so you can focus long-term financial strategies for long-term profits. Judith Hector is the director of marketing for Clients & Profits. She co-edits the quarterly newsletters.