Advertising & Marketing Industry
In the advertising and marketing sector, it is common to have numerous revenue and expenditure channels and clients. Budgeting and pricing for each project becomes crucial which if done incorrectly, could create financial management chaos, resulting in losses and poor relations with your clients. That’s where we come in!
Our accounting specialists understand that each business has unique accounting needs. This is why we provide customised solutions to all the clients we serve. We help you by taking charge of your advertising agency’s accounting needs in order to boost your business operation.
A leading branding and digital marketing agency based in Sydney.
Accounty was engaged to focus on three key issues to resolve:
Improve the quality & reliability of financial information
Access to better financial reporting
Before we started, the director of the business had no confidence in the financial information from their accounting software, Xero. It was quickly apparent why this was the case. A large proportion of the transactions were not allocated against the right income and expense categories, and there was a large backlog in bookkeeping. Employees were also not set up accurately, resulting in errors in leave entitlements and payroll amounts.
First, we reviewed the entire setup of the Xero file and improved the chart of accounts so the financial reports would present information in a way that would be most useful to the client. The backlog was cleared within a week and the accounts were kept up to date regularly from there on.
We implemented a project code structure that would allow profitability tracking by individual projects. The client was then able to use this information to review their pricing strategy for future projects and improved their overall profit margins.
In the advertising world where customers don’t pay until the project is complete, active management of cashflow is key. We used a multi pronged approach to tackle the cashflow issue. Any outstanding debts were chased up until debtor days were below 30.
Next, we streamlined the invoicing process to ensure there was no delay between securing the deal and issuing the invoice. We recommended and set up Workflow max, a project management software that integrates with Xero to enable time tracking & Work In Progress (WIP) tracking which made the invoicing process more efficient.
To address the reporting issue, we had in depth conversations with the director to understand what they needed from their monthly management reports. We provided insights on some of the key financial ratios and industry benchmarks they should be monitoring.
Next, we set up custom reporting templates with key financial metrics and ratios using leading reporting software called Spotlight with data being automatically extracted from Xero.
Average bank balance improved by 45%
Average debtor days dropped from 72 to 28
Profit margins improved by 10% due to project tracking
A well-received management pack used monthly