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What Is Your Accounting ROI? Ten Reasons Why an AMS Is Your Best ROI Tool

Accounting ROI

How many ad agency owners have asked about the return on investment (ROI) on their accountants?

How many owners of agencies completely and implicitly trust their accountants?

This is not to question your accountant’s competencies; yet, would you be interested in increasing his/her ROI by no less than 100%?

You can act to significantly improve your accountant’s accuracy, thoroughness and timeliness of reporting—and significantly increase their ROI to the agency through having more time to analyze the business, advise where applicable and spend less of their valuable time crunching the numbers.

Consider what your agency can gain from integrating your customer relationship management (CRM), project management (PM) AND accounting together in one agency management system, such as Advantage, Workamajig, Silent Partner or Clients and Profits.

Here are the top ten reasons why you should use an AMS;

  1. The accountant no longer must re-enter financial data from a project management system into a stand-alone accounting system. They’ll save time from re-inputting figures and ensure accurate and automatic posting. This time savings can be redirected into more important matters like improving the timing of delivery of a month-end reporting package.

 

  1. A single system can post billing; prebilling/advance billing; and accruals in the correct period. This follows the matching principle with respect to generally accepted accounting principles: billing and any related costs of billing are captured in the same reporting period, improving the accuracy of your financial statements.

 

  1. Each month, the system can record unbilled time and unbilled costs as assets, and the corresponding revenue, to properly reflect the results of the agency’s monthly efforts. This prevents a mismatch of reporting data from posting a billable cost (as an expense) in one period, and the related billing (as revenue) in another period.

 

  1. The accountant can be part of a project’s life and truly be involved in ensuring that a project achieves maximum profitability. A system alert from an AE or project manager keeps the accountant aware of any pertinent issues. The accountant becomes responsible for keeping an eye on the agency’s human resources as it does its best to service its clients. Too often, the accountant is the last one to find out about an important issue in a project, and then is stuck having to manage a significant write-off, directly affecting the agency’s operating results.

 

  1. Accrual, NOT Cash. The financial reporting data in a single system becomes a time-saving measurement tool for agency valuation. Far too many agencies report their numbers on a cash basis in stand-alone accounting programs. An agency’s valuation is based on an accrual, not a cash basis. Incidentally, the more profitable the agency, the greater the value.

 

  1. No more questioning if a company Profit and Loss (P&L) report has the correct reporting format. Generic software programs typically rank expenses from A-Z. With an AMS, you can have customized agency reporting, grouping your expenses after Adjusted Gross Income (AGI) for personnel and related benefits, and for all other overheads.Imagine seeing how your total salary costs relative to AGI are relative to industry standards.

 

  1. Client P&L’s (or project P&L’s, departmental P&L’s, AE P&L’s) help you determine whether the agency’s hard work on a client pays off. Personnel is the largest expense/investment on an agency’s income statement. It stands to reason that there should be an accounting for this outlay on a client-by-client basis in order to make proactive decisions, such as spending more time on profitable clients. Imagine seeing how the totals on the client P&L reports agree with the agency’s income statement and not just client AGI.

 

  1. Tracking unbillable time write-offs directly to a project and reallocating unbillable time to a billable job all in a single AMS saves time, and creates an audit trail for review. It is important to analyze in totality just what was or was not billed for each and every client.That old adage, ”time is money,” is so important today.

 

  1. Employee productivity and recoverability have never been more important, as today’s marketing professionals are increasingly accountable to their clients for the time spent on projects. As an important performance and utilization tool, it is critical for revenue earned by employee to reconcile to financial reporting metrics.

 

  1. Access monthly qualitative analysis. Monthly balance sheets and income statements are table stakes. What creates an outstanding accountant ROI is their ability to render an insightful, thorough analysis of the financial state of the agency in comparison to their business plan, and forecast each and every month!
     

There is no reason today to be on independent software platforms for project management and accounting. In many respects, the choice to separate these records COSTS the agency money.

If your accountant wishes to hang on to an old habit, ask yourself this question: Are you getting the maximum return on your investment?

If you are NOT earning the profit your agency should be, the financial facts around why should be presented to you with maximum efficiency. You can then make the requisite decisions to improve things. The choice is yours.

After all, doesn’t your client think the same way when they review their periodic marketing spend?

Vince Dong consults with independent marketing agencies in North America to help them make more money.

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