And we’re back! As previously mentioned, we love this sort of stuff. And equally, we appreciate that many creative agency types couldn’t think of anything more unappealing than organising the financial element of their business strategy. That’s why as experienced accountants for creative agencies of all descriptions, we strive to help you with the money side of things so that you can let your creativity roam free without worry.
We couldn’t fit all of our tips into one blog, so decided to spread them over two. Following on from Part 1 of our accounting tips for agencies dilogy, here we will delve into the finer details of forecasting, invoicing strategy and investing more in your finance function. Read on to discover more insider tips on how to make the most of your company finances.
Create goal-focused forecasts
Regardless of the industry that you work in, any accountants for agencies will tell you that creating an effective, goal-focused forecast is key. We often get asked what exactly a forecast is, and how it differs from budget. Here’s a bitesize run through for anyone who isn’t crystal clear on the situation.
Budget – This is about spend; a target to aim for. Typically agencies are great with budgets by understanding that you don’t want your overheads to surpass your budget.
Forecast – This is about predictions. Typically based on historic data combined with realistic presumptions for what lies ahead. It can be adapted over time, while budgets are ideally left untouched.
Creating a goal-focused forecast will help you envision what lies in store for your business in the coming months/years. We use Fluidly for this aspect of accounting. This awesome tool integrates with your historic analytical data on Xero, using the company’s history to help predict the company’s future.
Cash flow is king
Almost every agency lumps a large quantity of its focus on sales. Seeing them as the true barometer of the business’ success moving forward. However, obsessing over sales is not always in the best interest of company development when it comes to your finances.
In reality, cash and profit are where you should really be honing your focus. Initial instinct when faced with a cash flow drought is to tighten the purse strings. In our experience as accountants for agencies, we have encountered this situation more times than we can even remember.
However, there may be other ways to help encourage a freer flow of cash. It is less a case of what you do and moreso a case of how you do it. We could ramble on about how to optimise cash flow for pages and pages. And so we did! In the form of our helpful cashflow guide, which is free to download.
Invest more in your finance function
Ok, we realise that this may look a little suspect. Accountants for agencies telling agencies to invest more in accountants… But hear us out!
Your business journey isn’t one that you have to travel on your own. We see so many agencies struggling with the question of whether they should continue struggling to juggle business finances or ask for the help from a fellow professional who works in that area.
It is frugal to invest between 1 and 4% of your turnover, so it won’t exactly break your bank to seek help managing your finances. Plus, accountants make great coaches, too. A good accountant can help provide you with a sense of financial awareness, streamline your hiring process and teach how best to make informed decisions around your business numbers.
This is how we help people turn their creative passion into a full-time job!
As experienced accountants for agencies, here at Raedan we are obsessed with helping creative businesses through helping with their finances. If you are interested in working with us so that you can focus on taking your business to the next step, get in touch here.