Why PR agencies need cash reserves for crisis management and event delays

Key takeaways

• A PR agency emergency savings plan is non-negotiable. It's a dedicated pot of cash, separate from day-to-day funds, to cover 3-6 months of fixed costs like rent, salaries, and software.
• Event delays and client crises are a direct threat to cash flow. When a product launch is postponed or a client pauses work, your retainer income stops but your team costs don't.
• Your cash buffer policy should be a formal business rule. Decide how much to save each month and don't touch it unless a pre-defined "emergency" occurs.
• Start building your reserve with a small, automatic monthly transfer. Even saving 5% of monthly profit builds momentum and creates a financial cushion faster than you think.

Running a PR agency is about managing reputation, but your own financial reputation matters most. Your ability to pay your team on time, every time, is what keeps the lights on.

Yet PR work is uniquely vulnerable to sudden stops. A client's crisis becomes your crisis. A global event cancels a year's worth of campaign planning. A product launch delay means your retainer is paused.

When income halts overnight, your costs don't. This is why every PR agency needs an emergency savings plan. It's not a luxury. It's your business's life jacket.

An emergency savings plan for a PR agency is a specific pot of money set aside only for emergencies. Think of it as a financial airbag. You hope you never need it, but if you crash, it saves you.

This guide explains why this cash buffer is critical for PR agencies, how to build one, and how much is enough. We'll use simple language and real examples from agencies we've worked with.

What is a PR agency emergency savings plan?

A PR agency emergency savings plan is a dedicated cash reserve, separate from your main business account, designed to cover your fixed operating costs for a set period when normal income is disrupted. This means having enough money in the bank to pay rent, salaries, software subscriptions, and other essential bills for 3 to 6 months without any client income.

It is not your profit. It is not money you plan to spend on new hires or office upgrades. It is insurance. For a PR agency, the most common emergencies are client-related. A major event you've spent months planning gets cancelled. A key client faces a scandal and suspends all marketing spend.

Another client simply delays payment for 90 days. Your emergency fund lets you keep operating smoothly while you find a solution. Without it, you're forced to make terrible choices like missing payroll, taking high-interest loans, or letting good people go.

Building this fund is the first step to true financial stability. It turns a crisis from an existential threat into a manageable problem.

Why are PR agencies especially vulnerable to cash flow shocks?

PR agencies are vulnerable because their income is often tied to client events, product cycles, and reputational factors outside their control. A delay in a client's timeline directly delays your invoice, but your team costs continue every day. This mismatch between when you earn money and when you spend it creates a cash flow gap that can sink an unprepared agency.

Consider a typical scenario. Your agency is retained to manage the PR for a major tech product launch in Q4. You have a team assigned, you've booked media tours, and you're billing on a monthly retainer. Two months before launch, the client discovers a manufacturing fault.

The launch is postponed by six months. Your retainer is immediately put on hold. You now have a team with no billable work and six months of expected income gone. Your fixed costs, however, remain.

Other common PR agency risks include client cancellations after a negative news cycle, delayed payments from large corporate clients with 90-day terms, and unexpected costs during a crisis management situation, like needing to buy media monitoring software overnight. A robust working capital reserve is your only defence against these industry-specific pitfalls.

How much cash should a PR agency have in reserve?

Aim to save enough cash to cover 3 to 6 months of your agency's fixed operating costs. First, calculate your "burn rate". Add up all essential monthly costs you cannot easily cut in a week: salaries, rent, core software, utilities, and insurance. If that total is £20,000 per month, a 3-month reserve is £60,000, and a 6-month reserve is £120,000.

The right target for you depends on your client base and business model. If most of your income comes from one or two large retainers, aim for the 6-month end of the scale. If you have a diversified mix of many smaller clients, a 3-month buffer might be sufficient. The goal is to give yourself enough runway to replace lost income without panicking.

This is your working capital reserve. It exists to fund the gap between when you have to pay out costs and when you finally get paid by clients. For many PR agencies, building this feels impossible. The key is to start small. Set up a separate business savings account and automatically transfer 5% of every client payment into it.

Treat this transfer like a non-negotiable business tax. Over time, this disciplined approach builds a significant safety net. Specialist accountants for PR agencies can help you model your exact burn rate and set a realistic, achievable savings target.

What should a PR agency cash buffer policy include?

A cash buffer policy is a simple, written rule that defines how you build and use your emergency fund. It should state your target amount (e.g., "6 months of fixed costs"), how you will fund it (e.g., "5% of all invoice revenue"), and the specific scenarios that allow you to use the money. Writing it down prevents you from dipping into it for non-emergencies.

Your policy must clearly define what constitutes an "emergency". For a PR agency, legitimate emergencies typically include: the sudden loss of a major client representing over 20% of revenue, a client delaying payment beyond 120 days, or an unforeseen crisis requiring immediate unbudgeted spend to protect a client's reputation.

It is not for hiring a new account manager, upgrading laptops, or funding a slow month. By having clear rules, you remove emotion and guilt from the decision. The policy should also state how you will replenish the fund after using it. A common rule is to suspend profit distributions until the reserve is fully built back up.

This formal approach transforms a vague good intention into a core business discipline. It protects the agency from its owners' optimism and ensures the money is there when a true crisis hits.

How do you start building an emergency fund when cash is tight?

Start by automating a small, manageable transfer from your main account to a separate savings account every month. Even £500 or 2% of your revenue creates momentum. The act of starting is more important than the amount. Once the habit is established, you can gradually increase the percentage as your cash flow improves.

Look for quick wins to generate seed money for your fund. Could you invoice one client on a 14-day cycle instead of 30 days? Can you recover any old, forgotten client debts? Any one-off project income or unexpected windfall should go straight into the emergency fund until you hit your first milestone, like one month of costs covered.

Reframe your thinking. This is not money you're losing. It is the most important client you have – your future self. Pay this client first. Take our free Agency Profit Score to see how your cash reserves compare to other agencies and where you stand on financial resilience.

Building the fund feels slow at first, but the psychological security it provides is immediate. Knowing you have a one-month cushion reduces daily stress and allows you to make better long-term decisions for your agency.

What does a PR agency crisis preparedness checklist look like?

A crisis preparedness checklist is a practical document that outlines the financial and operational steps to take when a crisis hits. It starts with activating your emergency savings plan and includes immediate actions like communicating with your team, reviewing client contracts, and pausing non-essential spending. Having this checklist prepared in advance saves critical time and reduces panic.

Your checklist should have clear sections. First, the financial trigger: "If event X occurs, we authorise use of the emergency fund." Next, communication: "Notify the leadership team within 1 hour. Inform all staff of the situation within 4 hours." Then, cost control: "Immediately freeze all discretionary spending. Review all freelancer contracts."

It should also include a client management plan. Who will communicate with affected clients? What is the process for pausing or re-scoping work? Finally, it must outline the recovery plan. How will you begin replacing the lost income? Which new business leads will you prioritise?

This checklist turns a chaotic situation into a managed process. It ensures you use your cash buffer policy effectively and strategically, rather than just watching the bank balance fall. Complete the Agency Profit Score to benchmark your cash flow management against best practices in the industry.

What are the biggest mistakes PR agencies make with cash reserves?

The biggest mistake is not having a reserve at all. The second biggest mistake is raiding the reserve for non-emergencies, like a slow month or "strategic investments". Other common errors include setting an unrealistic target that feels unachievable, keeping the reserve in the same account as operating cash, and failing to replenish the fund after using it.

Many agency founders confuse profit with cash. They see a healthy profit on their year-end accounts and think they're safe. But if that profit is tied up in unpaid client invoices, it's not available to pay salaries tomorrow. Your emergency fund must be liquid cash, not promises of cash.

Another mistake is underestimating your true monthly burn rate. When calculating your costs, be brutally honest. Include everything. If you cut too much, your 3-month reserve might only last 6 weeks in a real crisis. Finally, agencies often fail to communicate the purpose of the fund to their team.

Your senior team should know the fund exists and what it's for. This transparency builds trust and ensures everyone is aligned when tough decisions need to be made. It turns the emergency savings plan from a founder's secret into a company asset.

How does an emergency fund improve your agency's commercial decisions?

An emergency fund gives you the confidence to say "no" to bad clients, negotiate better payment terms, and invest in long-term growth without fear. It removes desperation from your decision-making. When you know you can survive a client loss, you can fire difficult, late-paying clients that drain your team's energy.

It also allows you to seize opportunities. A potential dream client needs a crisis campaign launched in 48 hours, requiring upfront resource. With a cash buffer, you can say yes without worrying about cash flow. You can offer net-30 payment terms to a valuable new client instead of demanding payment upfront, making you more competitive.

Financially, it reduces or eliminates your need for expensive overdrafts or loans, saving you thousands in interest. It also makes your agency more attractive to potential buyers or investors, as it demonstrates sophisticated financial management and low risk.

In essence, a PR agency emergency savings plan is not just about survival. It's the foundation for sustainable, confident growth. It shifts your mindset from surviving month-to-month to strategically building a valuable business.

Building a financial safety net is one of the most powerful things you can do for your PR agency. It protects your team, your reputation, and your sanity. Start today, even if it's with a very small amount. The peace of mind is worth more than any immediate expense.

If you want to create a tailored emergency savings plan with experts who understand the unique cash flow rhythms of PR work, our team can help. Discover your agency's financial health with the Agency Profit Score – a quick 5-minute assessment that identifies gaps in your cash reserves and resilience planning.