August 2019

Why Cash Flow Is Key for Media Companies

5 minute read

Here's how media companies can manage their cash flow with cash flow analysis, credit cards, a line of credit, invoicing, cashless payments and more.

As an advertising, media or promotions business leader you help fuel the growth of great ideas, but in an environment that is ever-changing, the way in which you navigate challenges is a story in itself. Among the most significant hurdles in any industry, especially one as competitive as yours, is getting paid—and being able to pay others—in a timely manner. Unpredictable cash flow payments that take 30-90 days to arrive and be processed can cause a company to max out their ability to pay vendors, rent, salaries, freelancers and still run their business.

When it comes to managing cash flow, there are two priorities: controlling your expenses and growing your revenue. Chasing payment drives up costs due to processing slow, high-cost options like cheques and wire transfers. You may also be spending money on a bridging solution that has high interest rates, demands upfront payments and doesn't provide any incentives for you or your suppliers.

Check out some actions you can take to improve upon that cash flow management process.

Perform a cash flow analysis

Like the name suggests, a cash flow analysis looks at how money moves through your business, usually during a set period of time like 30 days, and patterns are formed about how money comes in and is paid out.

A cash flow analysis will give you an idea of how much cash you have on any given day. It will also tell you if cash is available to meet your expenses. Once you have your statement, you can make adjustments to fix the issues.

Limit or reduce costs

Take time to look internally to see if costs can be cut to reduce the outflow of payment. Some costs that should be reassessed include payroll, utilities and rent. Payroll is first on the list because it is often the biggest cost in running a business. Utilities and rent can be made more efficient by looking at remote work options, which can result in a smaller real estate footprint for your business.

Another consideration is to consolidate your vendors and streamline your purchasing processes with a suitable payment card . This will not only give you more control over your payments, it can also help reduce your purchasing costs and simplify the data management process.

Reach out to advertisers and/or vendors

If your cash flow statement shows that part of the issue is late-paying advertisers, which is often the case for media companies, this might be the time to address the issue. Propose solutions such as shortening their payment period or extending discounts for early payment. At the same time, reach out to your vendors to see if you can extend your payment period while staying within due dates to avoid interest charges. Another method could be billing upon completion instead of at the end of the month so there is an ongoing billing process.

Invest in lower cost funding

Low availability of cash happens with all businesses, and you need to free up some working capital that can be accessed during the slow period and reduce the need to borrow. This can be obtained in a cost and time efficient manner via a corporate credit card that offers attractive credit limits and interest-free periods. For example, American Express® business cards offer up to 55 days* of unsecured credit, with a limit that is defined based on your business' financial health, and you don't have to provide collateral when applying. You'll have cash on hand when you need it, off the balance sheet—immediately. You can also save on interest charges if you currently rely on a line of credit.

Make your payments work for you

Business credit cards offer more incentives than a personal card. This includes a lower interest rate and additional benefits for you, your vendors and suppliers. Some incentives include a cash back option if you accept payments through the card or points that can be used toward supplies, travel or even to pay for your company's holiday party.

Go digital with cashless payment

Processing cheques delays access to cash so consider payment solutions that allow you to accept and make payments efficiently, securely and ideally in ways that can fuel business growth. That means you won't be waiting for days, weeks or even months for a cheque to arrive in the mail or make a payment that reduces your cash flow flexibility.

Media companies are facing pressure as the industry adapts and changes. Managing cash flow effectively is an essential way to ensure you're still around to spread the news.

* As a charge card, the balance must always be paid in full each month in which no interest charges will apply. The interest free grace period is 28, 29, 30 or 31 days from the closing date of the current statement to the closing date of the next statement depending on the number of days in the calendar month in which the closing date occurs. The number of interest-free days varies based on a variety of factors, including when charges are posted to your account, whether your account is in good standing, and the closing date of your statement.