27 Nov Do you have a cash target?
Most businesses we work with have top line revenue profit. Often they’ll also have a net profit target. But for many businesses, particularly agencies, it’s important to have a cash target too…
If you have a largely fixed cost base in your people – ensuring you have enough work at all times to cover costs is really important. It helps the team from becoming absorbed in the delivery of projects to the detriment of bringing in new business/additional work.
Having a clear idea of the cash you have in your bank now, and over the next 3 years, is a solid idea for a number of reasons, not least because you’ll have:
- A robust financial system to build on
From prospecting to proposal, securing deposits, invoicing complete projects, monthly fees, and credit control – by focussing on cash in the bank, you’ll get full visibility of your financial system. And because it’s visible, you can refine the process to minimise any client drop-offs along the way.
- A relentless focus on profitability
No matter how good your pitch conversion rates, your invoicing procedure and credit control process are – generating profit is key to your long-term success. By focussing on cash in the bank, you’ll have a clear idea of what profit is tied up in incomplete projects and amounts owed for work in progress. This will help you concentrate on accelerating project delivery, which in turn, improves project profitability.
- Flexibility that gives you a strategic advantage
Being able to move at the pace of the digital world can be a huge advantage. With cash reserves in the bank, it means you can invest in equipment, people, or a specific marketing campaign, quickly pivoting the business to offer new or better services to clients. When this flexibility results in a competitive advantage, it’s also likely to result in more profitability long-term.
At Link Accounting there’s nothing we love more than helping you set ambitious goals for cash and profit and implementing the financial systems you’ll need to deliver the business growth you’re seeking. So get in touch, we’d love to hear about your plans >