Why 6 Agencies Lose Serious Money

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Here are stories I’ve heard on the grapevine this week about different agencies:

  • Agency A is owed £16,000 as a client goes bust.
  • Agency B’s new FD hides unpaid invoices (£34,000) in a vague attempt to cover up some basic accounting errors.
  • Agency C has a client refute and challenge a £23,000 bill with the words, “see you in court”.
  • Agencies D, E and F saw clients literally go AWOL (vanish or refuse to take calls or reply to any emails) owing £10,000+
  • Agency G discovers it has continued to collect direct debit fees of £10,000 pm from a client for 5 months after they should have stopped.
  • Agency H discovers that the book-keeper has stolen a six-figure sum (that’s right!) in a virtually undetectable scam.

So, what’s the message?

I wouldn’t be quite so wound up about this particular set of events if they weren’t true. Or if they weren’t happening to real people with real businesses with real mortgages and real staff to pay. You can cynically argue that this is the price you pay for going into business, but I don’t agree. Some of these troubles were brought about by sloppy systems and processes, but most were brought about by other people behaving shamefully. I am afraid that’s how it is out there, and you need to protect yourself from these people.

I guess there are several messages:

  • Never 100% trust your book-keeper even if you are fully aware of exactly what they are doing. Even the best of them can turn feral.
  • Never 100% trust your clients. Even the best of them can turn feral.
  • You should always have a rough calculation of the financial dashboard in your head (cash, invoices paid and owed, profit) and ruthlessly examine any discrepancies.
  • If you take your eye off the ball then the whatsit can hit the fan.
  • Lead score and credit check all potential clients.
  • Don’t be afraid to insist on payment in advance when clients have no track record with you.
  • Set tight credit terms and follow through with an effective collection system.
  • Stay on top of your finances every week, in good times and in bad.
  • Be a Rottweiler. Or hire one.

Finally, just because you’re paranoid, it doesn’t mean they’re out to get you.