Many smaller agencies and design studios tend to forget hard times when clients are active and billings are flowing. However, most long-term advertising agency people (and other business people) never forget hard times. Surviving a recession or two means you learn to always operate judiciously… just as in hard times. Remember, what goes up must come down. With a new administration in the White House, many business owners are optimistic: they expect deregulation and a more advantageous business environment. But the opposite could also come true— inexpert handling of economic policy could spur a sudden bout of economic uncertainty.
For this reason, and just because it pays to be prepared, here is a gift: a little aphorism you should copy and hang by your desk.
NEVER FORGET HARD TIMES.
Following is a financial checklist we routinely provide agencies experiencing hard times or poor financial management. Use this list to check the health of your internal financial status and practices. Take these simple steps toward making good business management a regular part of your agency life—and you will be well situated to take maximum advantage of good times and survive hard times.
1. Do you post time sheets every day?
2. Do you use pre-priced purchase orders for all major outside purchases?
3. Do you record payables to your accounting system within one week (or faster) of being received?
4. Within reason, can you bill a client to-date with a progress bill at any time?
5. Do you have current aged accounts receivable and accounts payable lists available at all times?
6. Do you have a cash reserve sufficient to keep operating for at least two months during a crisis?
7. Is your agency checkbook updated daily, with a balance, and do you reconcile the bank statement every month as it is received?
8. Do you have a program for collecting past-due amounts, using emails, letters, call records, etc.?
9. Do you pay your bills regularly at a certain time each week or month?
10. Do you receive a P&L (profit & loss) statement for the previous month by the 15th of the following month?
The list goes on, but these are the most important issues. Don’t let good times lull you into thinking you can operate lackadaisically. Tomorrow morning, put these few sensible checks in place, and you’ll live long and prosper… no matter what transpires in the nation’s capital. Expect the best, but prepare for the worst.
See also: Financial Statements: Timing Is Everything!
