Project business – a real cash flow challenge
Agencies and consulting businesses are facing big challenges when it comes to liquidity planning and maintaining solvency. Complex factors have to be taken into account in both cash flow relevant ingoing and outgoing payments.
With regard to the incoming cash flow, the most decisive factor is the success of your project business. Agencies and consultants are often dependent on individual contracts, which are only paid for after delivery. If a project is delayed or needs to be reworked, payment is also delayed. It also leads to a lack of incoming liquidity if already promised projects are postponed or not commissioned at all or if customers do not keep to the agreed payment deadlines. In such cases, a lack of liquidity sometimes has to be bypassed very quickly.
While the incoming cash flow is relatively unpredictable for agencies and consultants, there are comparatively high (fixed) costs on the side of outgoing payments. On the one hand, the employment of qualified staff means that the labour costs are relatively high. On the other hand, representative offices and complex technical equipment also cost a lot of money. In addition, project-related expenses, e.g. for freelancers, travel costs and expenses, must not be underestimated. A critical factor for cash flow is the fact that, for example, expenses or invoices for subcontractors often need to be paid long before the project can be invoiced to the customer.