Micro, small and medium-sized companies in Mexico are of vital importance, since they represent 99.8% of all companies in the country, generate 71% of employment and contribute 52% of gross domestic product (GDP) (Inegi) . However, they must overcome various drawbacks.
Some of the main internal problems of SMEs, which limit their development, are the lack of mastery of the management of their processes and the lack of long-term vision. According to several ScienceDirect analysts, a recognized cause of failure for Mexican SMEs is financial mismanagement.
For example, lacking full control over cash flow or cash flow may be a reason for the short life that most of these companies have: only 25% of SMEs in Mexico survive the first two years of creation, according to data from the Development Center for Business Competitiveness.
Bad payment chain: agencies suffer and clients complain
The advertising and marketing sector has a long pay period. If in the consumer products sector the wheel is completed in a maximum of 60 days, in this sector the invoices vary between 90, 120 and up to 180 days after receiving the product or service.
This rhythm requires a very fine administration that establishes a balance of the resources in cash and accounts receivable in order not to remain illiquid since the money only appears in an Excel spreadsheet. \
To this we add the context: Consultant W made a report that highlights the high concern that advertising and marketing agencies live in the pandemic: 93% believe that the industry is going through a highly complex situation within a climate of great uncertainty. More than half of the agencies acknowledge that they lost to inflation and their profitability decreased, forcing them to downsize during 2020.
The difficulties of the covid year had a direct impact on the payment chain at times of high inflation. Thus, marketers are faced with the dilemma of sustaining their businesses, helping their customers, remaining profitable, and … staying creative.
In this regard, Inegi explains that one of the causes of the short life cycle of SMEs is due to administrative failures; for example, 18% of companies must initiate legal proceedings against debtors. That is why it is so important to have assistance when managing payment chains
The basic question: do you have your playbook?
The advertising and marketing sector has a long pay period. If in the consumer products sector the wheel is completed in a maximum of 60 days, in this sector the invoices vary between 90, 120 and up to 180 days after receiving the product or service.
This rhythm requires a very fine administration that establishes a balance of the resources in cash and accounts receivable in order not to remain illiquid since the money only appears in an Excel spreadsheet. To this we add the context: Consultant W made a report that highlights the high concern that advertising and marketing agencies live in the pandemic: 93% believe that the industry is going through a highly complex situation within a climate of great uncertainty.
More than half of the agencies acknowledge that they lost to inflation and their profitability decreased, forcing them to downsize during 2020. The difficulties of the covid year had a direct impact on the payment chain at times of high inflation.
Thus, marketers are faced with the dilemma of sustaining their businesses, helping their customers, remaining profitable, and … staying creative. In this regard, Inegi explains that one of the causes of the short life cycle of SMEs is due to administrative failures; for example, 18% of companies must initiate legal proceedings against debtors. That is why it is so important to have assistance when managing payment chains
The basic question: do you have your playbook?
The mismanagement of cash flow in an agency is usually due to the fact that it does not have internal tools and processes that allow it to anticipate critical situations. These processes must determine which actions must be automated and which must be time-consuming.
The playbook or base playbook of a marketing and advertising agency involves tools that range from templates for project coordination, customer guide funnels, media plan, and collection and payment management. In the case of the liquidity of the company, it is advisable to have the highest possible level of automation, direct debiting of collections and payments, issuing invoices automatically, so that subsequent procedures that require another type of intervention are carried out from a real type report of accounts receivable, returns and withdrawals.
Once administrative problems are resolved, companies gain competitiveness, since they obtain valuable time to dedicate to long-term projection, product improvement and identification of market opportunities and, above all, they improve the experience of the customer. client, since the simplification of internal administrative processes translates into an optimization of the service purchase process, for example, by allowing payment with any means or from any corner of the world through a simple payment link.
More resources to manage your SMEs
To survive, SMEs must have toolboxes to lead agencies and focus on getting paid for work done. In this sense, a key resource is to have a workflow management platform inspired by the GTD philosophy (get the things done, ‘finish things’). Once a process is established, they can then evaluate performance and identify what needs to be improved.
Within this organized workflow, the collection and payment days are included, which must be established in this type of platform, such as Trello. An entrepreneur who wants to grow not only needs talent, but also the right technological resources. Finally, when talking about advertising and marketing agencies, another aspect that we should not ignore is the need to find the key message for your target audience.
And for that you need correct and efficient funnels or sales funnels. In this direction, external advice can be essential, if not essential: well-planned campaigns mean good results. And, in turn, this represents the satisfaction of your customers and their willingness to pay in a timely manner. Changing strategies in times of crisis is essential in order to survive.