10 Sep Plan B Plan B is a marketing agency in Saudi Arabia.

Plan B

 

Plan B is a marketing agency in Saudi Arabia. It is not your conventional agency as it does not deal in above the line marketing. It is an agency that does on the ground activities by catering to client’s needs through consumer insights.

The Cash Flow Scenario

 

They system and procedures a marketing agency like Plan B needs to go through in terms of its cash flow management is relatively complex and provides countless headaches along with it. In terms of the cash flow, I will explain how Plan B undergoes its accounts payables and accounts receivables when a project starts and finishes.

 

 

To depict the situation of how the system works here in terms of Accounts Payable (AP) and Accounts Receivables (AR), I will provide an example followed by an actual income statement, balance sheet, and cash flow statement from January 2015.

In the agency business, clients generally enforce 60-90 days of credit terms once the project is completed. Meaning that Plan B only get its full payment within 90 days of the project’s completion.

Plan B needs to pay 40% of the projects cost upfront to its suppliers in order to launch the project. The remaining Balance to the suppliers must be paid within 30 days of the project’s completion. Plan B also needs to invest 40% of the total cost up front which includes the following

· Paying for rentals,

· Set-up of project,

· Promoters and HR.

· HR being the training of promoters hired for specific client activities.

 

The tables below show the income statement of Plan B from 2014 and 2015 along with the Balance sheet of years 2013, 2014, and 2015 and a Cash Flow statement from 2015 highlighting the issue. It shows the company operated in loss, but also grew significantly in two years as well. The Raw Data for all 3 statements will be in the appendix. Below I will show graphs and tables indicating current trend and make an analysis.

 

 

( Jan – Dec ’14 – Income Statement 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 -1,000,000 Total Sales Total Cost Of Goods Sold Gross profit Total Operating Net Expenses Income/Loss )

 

Table 1

( Jan – Dec ’15 – Income Statement 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 -1,000,000 Total Sales Total Cost Of Gross profit Total Operating Net Goods Sold Expenses Income/Loss )

 

Table 2

 

 

 

 

 

 

 

 

 

1,200,000

 

Assets 2013

 

 

 

 

1,200,000

Liab & Equity 2013

 

 

 

1,000,000 1,000,000

 

800,000 800,000

 

600,000 600,000

 

400,000 400,000

 

200,000 200,000

 

– –

1 1

Table 5

 

 

 

 

 

 

 

 

 

 

2,500,000

 

Assets 2014

 

 

 

 

2,500,000

Liab & Equity 2014

 

 

 

2,000,000 2,000,000

 

1,500,000 1,500,000

 

1,000,000 1,000,000

 

500,000 500,000

 

– –

1 1