{"id":70189,"date":"2025-02-05T20:18:40","date_gmt":"2025-02-05T20:18:40","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/outsourced-accounting-services-for-marketing-agencies\/"},"modified":"2025-02-05T20:18:40","modified_gmt":"2025-02-05T20:18:40","slug":"outsourced-accounting-services-for-marketing-agencies","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=70189","title":{"rendered":"Outsourced Accounting Services for Marketing Agencies"},"content":{"rendered":"


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Digital <\/span>marketing agencies<\/span> can refer to different kinds of businesses, including design-dev agencies, advertising agencies<\/span>, SEO<\/span>-ppc agencies, as well as product-only.<\/p>\n

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Usually founded by people with creative and technical expertise, these marketing businesses<\/span> often grow out of a partnership, with one business owner<\/span> leading the development efforts and the other in charge of sales.<\/p>\n

However, this division of labor leaves an important role vacant: finance.<\/p>\n

As David C. Baker, author and agency advisor, explains on an episode of the Creative Agency Success Show<\/a>, \u201cAt least one of the partners has to think that their one of their primary jobs is to understand and impact the financial performance of the firm. That’s job one. That’s even more important than culture. It’s more important than new business. Once you get that done \u2014 and you may need some help with that \u2014 then you can move on to those other things.\u201d<\/p>\n

\u201cBut if the firm isn’t performing,\u201d he cautions, \u201cIt doesn’t matter how good your new business plan is. You won’t need one.\u201d\u00a0<\/p>\n

Why do marketing firms<\/span> need accounting services<\/span>?<\/h2>\n

In the early days of an agency\u2019s life, it\u2019s possible to increase profitability<\/span> through hard work and talent. Your \u201cfinance team\u201d might include a bookkeeper<\/span> and outsourced tax services<\/span>.<\/p>\n

However, when the agency reaches a certain size, business growth<\/span> tends to stagnate. Even as accounts receivable<\/span> trend upwards, so do accounts payable<\/span>. Cash flow<\/span> management<\/a> becomes more of a struggle. Networking just isn\u2019t enough to fill the pipeline. \"Why<\/p>\n

When a small business<\/span> reaches this stage, they need something more than simple tax filing<\/span> and bookkeeping<\/span> services<\/span> or a subscription to some accounting software<\/span> like Quickbooks<\/span>, but aren\u2019t ready to invest in a full-time in-house<\/span> accountant<\/a>, CPA<\/span> or CFO<\/span>.<\/p>\n

When this happens \u2014 usually around the $3 million revenue mark \u2014 agencies should consider outsourced <\/span>accounting<\/span><\/a> services<\/span>. These services can range from transactional (filing tax returns<\/span>, invoicing, and financial reporting<\/span>) to strategic (tax planning<\/span><\/a>, dynamic forecasting<\/span><\/a>, and more) \u2014 essentially a financial planning and analysis (FP&A) position.<\/p>\n

Both the strategic and the transactional can be covered by a virtual or fractional CFO<\/span><\/a> who possesses both the accounting knowhow<\/span> and the high-level expertise in helping creative agencies grow<\/a> by developing and tracking key performance indicators<\/span>.<\/p>\n

How do marketing firms<\/span> benefit from specialized accounting services<\/span>?<\/h2>\n

Working with an outsourced accounting<\/span> firm means bringing financial expertise onto your team \u2014 but along with that, it can be helpful to work with a firm that specializes in digital advertising agencies<\/span><\/a>. A CFO<\/span> with industry knowledge, including a deep understanding of the most important kpis<\/span> for marketing firms<\/span>, will have a wide range of experience in solving common challenges agencies face, for example around marketing their own services<\/a>, setting competitive pricing<\/span>, and making budgeting<\/span> decisions.<\/p>\n

Many of these challenges are financial, for example, how to build up a cash reserve that allows the agency to weather tough financial times.<\/p>\n

\"HowHowever, a virtual CFO<\/span><\/a> also addresses the business from a 10,000-foot view. As Adam Hale, Partner at Anders CPA<\/span> + Advisors and Virtual CFO<\/span> practice leader explains:<\/p>\n

\u201cWe do finance, but we have a finance lens over the entire side of the business. We want to hear about what’s going on in the marketing, we want to hear what’s going on operations, because that helps us craft the plan in that way, so whenever they come up with an idea, and we need to flesh it out, we can say, \u2018Wait a minute isn’t that contrary to what we were saying over here and what we’re trying to do?\u2019\u201d<\/p>\n

In order to have that level of understanding of the business, an outsourced advisor should meet regularly with the leadership team, ideally every week.<\/p>\n

KPIs<\/span> for Marketing Firms<\/span><\/h2>\n

A successful marketing firm<\/span> needs to track these four main areas:<\/p>\n