In this episode, hosts Peter Kang and Sei-Wook Kim talk about the critical yet often overlooked topic of cashflow management for agencies. They share lessons on balancing profitability with liquidity, designing client contracts to align cash inflows with outflows, and determining the right amount of cash reserves to weather uncertainties.

From the pitfalls of 50/50 payment structures to the advantages of retainer-based models, Peter and Sei-Wook explore practical strategies to avoid cash crunches. They also discuss the emotional and financial challenges of using reserves to sustain operations during downturns, the role of insurance and credit lines as safety nets, and how centralized cashflow management works in a multi-agency portfolio.

Whether you're a solo founder or managing multiple agencies, this episode offers actionable insights to build a financially resilient business.

Key Moments

1. Why a profitable P&L doesn’t always mean money in the bank.

2. How lumpy payment structures can create cashflow nightmares.

3. Shifting to frequent, project-aligned invoicing to smooth cashflow.

4. Why retainers create positive cash conversion cycles.

5. How much cash to hold (1–6 months of expenses) and when to distribute profits.

6. The risks of over-relying on cash buffers to delay tough decisions.

7. Building granular cashflow projections to avoid insolvency.

8. Centralized finance strategies for portfolio businesses.

9. Insurance, credit lines, and owner investments as backup plans.

Real Talk Takeaways

1. Profit isn’t equal to Cash. Accrual accounting masks timing mismatches between revenue and actual payments.

2. Design payments like payroll…invoice frequently to mirror when work is done, not when projects end.

3. Retainers are KING. They provide float by collecting cash before incurring expenses.

4. Hoarding cash can mask operational inefficiencies.

5. Cut costs early. Delaying tough decisions burns reserves faster than expected.

6. Insure against disasters…legal liabilities can dwarf cash reserves overnight.

7. Credit Lines = Emergency use only. It is cheaper to use your own cash than pay high interest.

Timestamps

00:00 – Welcome to Agency Habits

00:52 – The disconnect between P&L profitability and bank balances

02:40 – How 50/50 payment structures create cash gaps

04:27 – Best practices: Frequent invoicing and expense matching

06:33 – Retainer models and the power of positive float

08:07 – Handling prepayments (don’t treat them as instant profit!)

09:15 – How much cash to hold (1–6 months of expenses)

12:04 – The emotional dilemma: Using reserves to save jobs vs. facing reality

15:12 – The lifesaving role of granular cashflow forecasting

18:07 – Multi-agency cashflow: Centralized reserves and holding company strategies

20:06 – Insurance and credit lines as last-resort safeguards

23:41 – Final advice: Keep 1–6 months of cash, separate reserves from growth investments

Notable Quotes

"Cash is the lifeline of whether you can run your business day to day."

"On paper, you might have amazing profits, but the bank account tells a different story."

"If you’re paying team members before clients pay you, you’re playing with fire."

"Reserves aren’t for funding losses, they’re for timing mismatches."

"A lawsuit could tank not just your cash, but your entire business."

Links & Resources

Peter Kang on LinkedIn: https://www.linkedin.com/in/peterkang34/

Sei-Wook on LinkedIn: https://www.linkedin.com/in/seiwookkim/

AgencyHabits Website: https://www.agencyhabits.com/

AgencyHabits on LinkedIn: https://www.linkedin.com/company/agencyhabits/

Barrel Holdings Website: https://www.barrel-holdings.com/

Barrel Holdings LinkedIn: https://www.linkedin.com/company/barrel-holdings/