Running a Successful Creative Agency: The Accountant
Read time: 8 minutes
At Function Point we’ve worked with creative firms, advertising agencies and digital agencies for the past 20 years. We help define internal processes and workflow, and in doing this we have come up with 6 personas that interact within the typical creative agency.
Helping people in this role work more efficiently and effectively together will help the agency become much more profitable.
The 6 Personas
The agency accountant or bookkeeper is responsible for maintaining General Ledger accounts, invoicing clients and preparing monthly, quarterly and annual financial reports. In addition to processing payments to vendors and comparing actual expenses to budgeted costs, the accountant is responsible for investigating and resolving any errors posted to the General Ledger, as well as reconciling accounts each month.The bottom line is that the accountant manages the agency’s money. Ranging from lower-level data entry to more advanced responsibilities such as financial analysis, the agency accountant is the backbone of the financial success of the company.
The accountant’s main responsibility is to account for the financial assets and liabilities of the agency. This means that the accountant will keep track of what the agency is earning and spending. They are in charge of managing and reporting the financial information of a creative agency. They must prepare financial statements, examine and analyze an agency’s books, and ensure that financial reporting requirements and other accounting standards are met.
Accountants can assist you in finding digital solutions to increase efficiency, structuring your organization for growth and tax planning, and better managing cash flow. They take care of the planning, budgeting, and evaluating your financial health to find improvement areas for profitability. With their assistance, you can concentrate on what you do best: expanding your business and giving customers value.
A Typical Day
Accountants create and review financial records, ensuring that taxes are paid on time, and records are accurate. The following are examples of various accountant duties and responsibilities:
- Create invoices and send them to clients.
- Pull and analyze financial/status reports on work in progress using data on income and expenses.
- Present financial reports to management
- Look after agency payroll
- General ledger entries and other bookkeeping.
- Balanc the company’s bookkeeping ledgers and bank statements
- Record and examine employee spending
- Keep track of income and expense accounts
- Monitor the agency’s financial situation
- Submit tax returns and other required payments
- Manage the company’s financial and accounting software
A Typical Interaction with FP
- FP is used to look at the job, verify and create invoice(s)
- FP is used to enter and track expenses to jobs
- Function Point’s QuickBooks Integration is used to transfer invoices and expenses to QuickBooks or a manual export is done to export to other accounting solutions
- FP reports are used to analyze job and client profitability as well as revenue and cash-flow forecasting
- FP timesheet and payroll reports are used to verify staff effort, efficiency and payroll hours.
A Perfect Day
- Invoices are created and sent out to clients, and through FP’s QuickBooks integration all the information is sent through to QuickBooks. Also, reports pull up and show that the agency is profitable based on time and expenses, and payroll is met.
Top of Mind Issues
- Getting invoices out on time and ensuring that all time and expenses are tracked properly
- Management reporting and analysis
- Getting paid by clients
- Ensuring everything is up-to-date in QuickBooks or the agency’s accounting software
Why Do You Need An Accountant In Your Creative Agency?
An accountant with experience in the creative industries is aware of all financial practices and can contribute their expertise to a company’s success and improvement. There’s a difference between a company performing well enough to stay afloat and one that is actually growing.
Here are some benefits of having accountants for your agency:
Accountants with experience in the creative industries are knowledgeable about the business of creativity. They know what it takes to excel and can provide meaningful comparisons to top-performing companies. With their collaboration, agency owners can raise performance levels to meet or even exceed industry requirements.
Additionally, they can give your leadership team benchmarks about market billable rates, labor expenses, overhead rates, and other detailed information like insurance costs, rent prices as a percentage of sales, and the competitiveness of your employee incentive plan.
In order for finance and leadership to work well together, there must be shared language communication. You cannot overstate the importance of being able to communicate information clearly and rapidly using industry jargon. With experienced accountants familiar with the creative industries, there is no longer a need to explain or clarify when referring to roles such as freelance copywriter. Accounting for the creative industries is simple with their expertise.
Moreover, creative agencies often embrace a culture of self-expression and innovation. An accountant who has worked their entire career in a busy marketing agency appreciates and welcomes that culture, thus working well together with other departments.
Relevant Reporting Management
A creative industry accountant offers a wide range of project-based reports that are valuable. Their expertise lies in the knowledge of your agency’s nature and the key performance measures.
An accountant with experience in the creative industries can tell you which metrics you should be tracking and why, providing valuable insights into why they are important.
Project accounting is the core focus of accountants in the creative industries. It is their specialized area of expertise. You’ll gain complete visibility into the performance of your projects with the help of a creative industry accountant.
How much of those out-of-pocket payments were actually reimbursed won’t be a mystery anymore. If any unreimbursed expenses arise, an accountant will know how to handle them and enhance your future projections.
Running a Successful and Profitable Creative Agency
Increase your agency profitability while focusing on what matters most: the quality of your creative work
How To Find The Right Accountant For Your Creative Agency
Your creative agency will benefit from having a skilled, seasoned individual manage one of the most crucial facets of your company: your money. Hiring the right person will save you time and money. Here are some factors to think about while selecting an accountant.
Select a Chartered or Certified Accountant
Professional accountants may be referred to as Chartered Accountants or Certified Public Accountants, depending on the nation you’re in. Chartered Accountants (CAs) are highly skilled individuals who have successfully completed a specialized competency program, as well as degree-level coursework, work experience, and workplace training.
A qualified or chartered accountant will add value to your company right away thanks to their expertise. This role should be hired sooner rather than later if you anticipate seeing growth in your creative agency.
Although it is feasible to hire accountants who are not certified, chartered, or registered, doing so may be a bad idea for your company. A professional accountant may not be necessary for tasks like bookkeeping, tax preparation, and general financial management. However, you will almost certainly require one if your business expands to the point where you need a loan or if you ever undergo an audit.
Think about How they’ll Improve Your Creative Agency
It’s crucial to thoroughly analyze your options and determine whether the accountant you’re contemplating can assist you with financial guidance to make wise long-term decisions.
Some accountants only concentrate on finishing the current work. In contrast, others take a more proactive approach to managing your funds, completing tax returns, and handling your accounts. Always ask a prospective business accountant for suggestions on ways to cut costs for your agency.
The greatest accountants will have ideas for procedures that may be implemented to support the success of your company. Before selecting your accountant, think about how this working relationship will ultimately support, contribute to, and direct the expansion of your creative agency.
Evaluate Fee Structuring Skill
When searching for an accountant, it is crucial to find someone skilled in structuring the right fee arrangement for your specific needs. There isn’t a single, accepted way for accountants to bill clients. Some will bill by the hour, some may ask for a monthly retainer, and yet others may want a cut of your sales.
While a charging system may make sense for a small business, as your agency grows, it may lose its appeal. Thus, finding an accountant who can adapt the fee structure as your business expands is crucial. Make sure to test this skill of your applicants, then thoroughly compare them afterward.
Consider your intuition
Think about your gut feeling when you first meet a candidate. In addition to logical considerations like location, cost, experience, and references, consider whether you could trust this person with sensitive information about your company and collaborate with them going forward.
If your instinct tells you to back off, you should probably do so. Your unconscious mind may have picked up on subtle cues like body language and speech patterns. Although intuition isn’t always accurate, it shouldn’t be disregarded when selecting a vital role like a corporate accountant.
To Sum Up
There is no question that an accountant can contribute significantly to increasing the value of your company. By hiring a professional accountant, you can accelerate the growth, success, and long-term sustainability of your business.