In a small business cash is king and cash flow — the amount of money that comes and goes out of a business during a fixed period of time — makes the world go ‘round. And, in a WordPress design and development agency, cash flow is directly tied to getting paid on time by clients, establishing multiple income streams, reducing expenses, and better managing cash on hand.
Positive cash flow in your WordPress agency means that:
- You are able to pay your bills and payroll without worry and stress
- You have the money needed to hire that new employee or bring on another subcontractor
- You are able to jump on new investment opportunities
- You are able to invest in new software and technology needed to serve your clients to the best of your ability
- You are able to launch new marketing campaigns to grow your business
Unfortunately, 29% of new companies are forced to close their doors due to money shortages and 64% of small businesses are affected by late payments. One of the industries most affected by late payments is web design because when you don’t have access to cash or you’re cash flow is negative:
- You are unable to pay your bills, you struggle to make payroll, and you rack up credit card debt that keeps you up a night
- You’re unable to hire the help you need, so you and your current team are working long hours and are at or near burnout and exhaustion
- You have to pass on new investment opportunities
- You don’t have the money to invest in new software and technology, which could potentially hurt your business and cause you to lose clients
- You’re unable to invest in marketing efforts and find your business stuck
As you can see, maintaining a positive cash flow in your WordPress agency is critical to the business’ stability and growth.
11 Ways to Improve Cash Flow for Your WordPress Agency
Here are 11 ways to improve cash flow in your WordPress Agency so you can reduce stress and plan for the future:
1. Diversify Project Type
To reduce stress and add margin to your schedule, diversify the type of WordPress website projects you accept. Aim for a mix of short projects that provide quick cash flow boosts between the milestone payments for your larger projects.
2. Seek Out Retainer Work
In addition to the one-off WordPress projects and short-term website projects, seek out long-term, ongoing retainer work and website support clients. Retainer and website support work provides a stable, known income you can rely on for future forecasting, planning, and business growth.
3. Invoice On Time
In website contracts, your WordPress Agency should be outlining the total investment amount and the payment schedule. A typical payment schedule may look something like this:
- 25% Non-refundable deposit due at the start of the project
- 25% Due upon design approval
- 25% Due upon theme completion
- 25% Due prior to website launch
No matter what your payment schedule is, you need to invoice on time so you can not only demonstrate the seriousness of the payment schedule but get paid on time. For example, using the payment schedule above, the client would receive their second invoice as soon as they provide design approval — either the same day or the next day.
4. Invoice Regularly
For all work not tied to specific milestones, it is imperative that you establish a regular invoicing system and if you don’t have time to stick to it, delegate it to a team member. For example, at my agency, Bourn Creative:
- Singular website clients are invoiced by milestone
- Monthly retainer and website support clients are invoiced on the first of every month
- All other clients (accumulative work) are invoiced every other Friday
5. Use An Invoicing Service
Make invoicing easier by investing in software to manage your invoicing. Some software allows you to manage both your estimates and invoices in the same place, others only offer invoicing services.
At Bourn Creative, we use Quickbooks Online to invoice our clients because the payments are automatically linked to the invoices and reconciled in our bank account and it reduces the number of hours we need to spend on bookkeeping and taxes. If you use WooCommerce, Quickbook can integrate directly.
6. Provide Payment Options
Make it easy for clients to say yes to large projects by offering payment plans.
- For payment by credit card, the payment plan is set to invoice the client every 30 days until the payment plan is complete. With this approach, we are paid no matter what delays the project encounters.
- For payment by cash, check, or bank transfer, the payment plan is based on major project milestones such as the start of the project, theme development completion, and website launch.
7. Use Change Orders
It can be very tempting to overdeliver, provide a remarkable experience, and wow your client so you can get a killer testimonial, referrals, and even a great case study to add to your portfolio. But you can’t do that at the expense of your hourly rate and profit margin by working for free.
If a client needs to make changes to the scope of work or add more work to the project partway through the project, awesome! Talk through the changes or additions, write up a change order documenting the implications on the timeline and budget, and provide it to the client to approve.
8. Leverage Automation
If you’re like me, you love the work you’re doing, but not the administrative tasks that come along with freelancing or owning a WordPress agency. Thankfully automation is available to make running your business easier:
- Automate new client onboarding and education
- Automate invoicing for monthly retainer and website support clients
- Automate the payment plans for clients paying by credit card
- Automate internal tasks that must be completed for every new project
9. Offer Special Savings Opportunities
There are going to be times when you need a big cash infusion in your business so you can:
- Purchase a new computer, software, or office equipment
- Invest in a conference or training event to network and uplevel your skills
- Book travel to a conference or training event
- Reinvest in your business through automation and marketing
- Get help reaching a goal
To create quick cash boosts, offer clients special savings opportunities like:
- A discount if the client pays in full at the start of the project
- A discount if the payment is made by cash, check, or wire transfer
- A discount if the contract is signed and the deposit is received by [DATE]
10. Automate Business Savings
A healthy WordPress agency needs to not only be profitable but to be saving for the future. In addition to a business savings account, consider accounts for major expenses like 401K contributions, the annual team retreat, client holiday gifts, or computer equipment. Then set up the appropriate automatic monthly transfers from your main business account into the savings accounts.
This will ensure the money for those expenses is there when you need it without causing you stress.
11. Reduce Expenses
One of the fastest ways to make more money is to spend less money. On an annual basis, at a minimum, evaluate all of your business expenses to see what you absolutely need and what you may no longer need.
- See if there are services you aren’t fully using whose plans can be downgraded to a cheaper option
- Consider calling service providers like telephone, internet, and insurance to see what options are available for lowering your rates
- Check to make sure the products and services you are using are still the best choices and that a new better/cheaper competitor hasn’t entered the market
- Review business travel expenses and the ROI for the travel to make sure the investment is worth the expense and time out of office
Better Cash Flow = Better Business
Even though you do all the right things when it comes to serving your clients, it is still possible to fail at running your business if there are persistent cash flow issues. Creating a cash flow positive WordPress agency requires you to pay attention to all money coming into the business, all money in limbo (invoiced but not paid), and all money exiting the business.
Start by reviewing your WordPress agency’s finances. Look at the diversity in project type and how much money each service type and client is generating for the business. Then make sure you’re invoicing on time, invoicing regularly, and providing flexible payment options, and see where your invoicing processes can be streamlined and automated. Finally, evaluate all of your expenses to see not only what is and isn’t needed, but what can be reduced.
Need Additional Managing Your WordPress Agency?
Download our free guide on Building Out Your Digital Agency With Managed Hosting and find out exactly what managed hosting is and how it can streamline your business processes to help you more easily achieve a positive cash flow.
About the AuthorMore Content by Jennifer Bourn