Agency Cash Flow: Managing Feast and Famine

The agency cash flow cycle is brutal. Big projects create cash surpluses, then gaps between projects create crunches. Here's how to smooth it out.

The Problem

Project revenue is lumpy. Client payments are delayed. Payroll is constant. The math doesn't add up without intentional cash management.

The Reserve

Three months of operating expenses in cash. Non-negotiable. This is the buffer that prevents panic decisions during slow periods.

Payment Terms

50% upfront, 50% on completion for projects. Or monthly retainers paid in advance. Never net-60. Your cash flow can't subsidize client float.

Revenue Diversification

Productized services with recurring revenue. Retainer clients alongside project work. Multiple client industries so downturns don't hit everything at once.