As a marketing agency, it’s your business to help other businesses reach, engage and create emotional connections with their target audiences via a variety of strategies and mediums. However, marketing agencies still need the same core services that many other businesses do – and one such service is accurate and timely accounting and financial planning.

Accounting for marketing agencies isn’t that different from accounting practices used for just about any other company – but there are some unique aspects to consider. For instance, agencies typically manage multiple client accounts simultaneously and have to track the return on investment from many different campaigns that are organized. Keeping all of this financial data organized can be more difficult than it may initially seem.

Why Accurate Bookkeeping is Vital for Marketing Agencies

Accurate bookkeeping is vital for marketing agencies in the same way as it is vital for any other type of business – it helps any agency make smarter financial decisions. Accurate bookkeeping is important for tracking expenses, gauging revenue and determining the overall financial health of any agency.

Accurate bookkeeping is also an important part of any effective financial management strategy. It allows agencies to make confident decisions based on data. Good bookkeeping can help ensure regulatory compliance. It can help track expenses, revenue and financial health, and it can also help leadership enact a clear plan of growth.

Best Accounting Practices for Marketing Firms

There are various accounting best practices for marketing agencies. Some of these include:

• Gains and spending observation: Gains and spending are also commonly known as “capital gains and losses” or “profits and losses.” It’s simply a strategy that helps your marketing agency gauge what you’ve earned and what’s coming into the company versus the money that’s moving out of the agency. It’s an important method to get an idea of what your agency’s gross revenue is. It can also help you make adjustments to how you’re running your business so that you’re able to maximize any gains.
• Capital movement: Capital movement is the transfer of money. In the context of a marketing agency, it’s the transfer of money between your agency and another company.
• Forecasting: Financial forecasting uses historical data to estimate a company’s future performance. This strategy can help determine budget plans while guiding any policy or planning decisions.

In addition to these accounting strategies, financial reports are another important best practice that should be utilized within a marketing agency. Financial reports do more than just provide a snapshot of an agency’s overall financial health – they provide input on cash flow, debt, taxes and more. Financial reports can also go a long way in enticing new investors or, in the case of an agency, clients, to do business with your firm. It’s only natural for would-be partners or clients to want to see and understand the financial health of any agency before agreeing to do business with it.

Accounting Structures Tailored for the Marketing Sector

Accounting for advertising agencies isn’t a lot different from accounting for any other business, but there are specific nuances and structures that lend themselves better to this type of work. Here’s a look at some of the more popular accounting entries in the marketing field:

Single-entry

This is a more simple accounting structure that’s best for creating a simple snapshot of capital movement as it enters and exits an account or an organization. It’s a good way to monitor core economic activities – but not much beyond that.

Double-entry

The double-entry structure operates with the assumption that every action impacts the debit and credit of at least two accounts. Just think of it as any increase or decrease in income or expenses leading to a change in assets and liabilities. It helps agencies more quickly spot any errors or irregularities while guiding them toward potential enhancements.

Ensuring ROI Analysis in Marketing Campaigns

Marketing agencies, especially digital ones, need to demonstrate the return on investment (ROI) for the campaigns they manage for their clients. The greater the ROI, the more successful the campaign – and vice versa. In the context of a marketing campaign, the formula for calculating ROI is as follows:

• (revenue – expenses)/campaign expenses

Keep in mind that all campaigns don’t have the goal of increasing sales – at least in the near term. Many marketing campaigns aim to raise brand awareness and may take longer for results to play out. In the case of a brand awareness campaign, it’s important to specify a true-to-life timeline.

Working with a professional accounting firm or professional bookkeeper can help ensure that you’re receiving the right reports to fully track and measure the impact of investments.

Common Bookkeeping Errors to Avoid in Marketing Agencies

Running a marketing business is often time-consuming and complicated, especially when you consider that you’re likely working with several clients and running a range of different programs. That said, it’s not unusual for mistakes to occur. The good news is that many errors can be avoided and proper financial management can be achieved by outsourcing bookkeeping to a firm that specializes in working with marketing agencies.

Here’s a look at some of the common errors that many marketing agencies make when it comes to their accounting:

• Dividing individual and business capital: When you divide individual and business capital, it can be difficult to properly gauge profitability and your agency’s actual real-time financial status. A good bookkeeper can help keep individual and business capital on track, avoiding this common miscue. This doesn’t just help paint a more accurate financial picture, but it can assist during tax time too.
• Ineffective cash flow: This is another common miscue, and it occurs when an agency doesn’t properly handle its payables and receivables. A mix-up such as this can result in poor cash flow within the firm, which can thereby make it difficult to track business expenses and pay debt. By paying attention to key performance indicators and optimizing accounts payable and accounts receivable, you’ll take greater control of repayment terms, expenditures, customer reputation and likely have better relationships with partners and suppliers to boot.
• Not getting the appropriate help or using the appropriate resources: Whether it’s leveraging accounting software or working with a third-party bookkeeping firm that specializes in such services for marketing firms, investing in such resources is likely to have its own return on investment over time.

Practical Tips for Successful Accounting in Marketing

Looking to improve accounting practices at your marketing agency? Here are some tips that you may consider implementing:

• Look to automation: Automation is an emerging technology that’s largely designed to help people make decisions faster and smarter. It’s only going to become a more important tool to utilize over time to remain competitive – and it’s beginning to take hold in accounting. Automated accounting tools can help streamline productivity and help you work smarter, while not necessarily harder.
• Keep track of all your financial activity: From gains, spending, bills, and receipts – make sure you have a record of everything. This is one of the most important things you can do to ensure successful bookkeeping, especially when it comes to some of the key practices like capital movement, forecasting, and gains and spending.
• Regularly review financial statements: If you’re not aware of your current financial statements, how are you supposed to change your agency for the better? It underscores the importance of regularly reviewing financial statements with your designated team. This way, you can make sure you understand the information and plot a strategy for the future accordingly.

Lastly, don’t be afraid to seek outside help. It can pay – literally – to work with a professional bookkeeper who specializes in accounting for marketing agencies to ensure that your financial reports are accurate, up-to-date and trustworthy. A good accounting firm for marketing agencies can do more than just control the books, but help with client invoicing, margin analysis, expense reports, operational accounting, tax compliance and more. There are often significant cost savings to working with a third-party bookkeeper or accounting firm rather than bringing such professionals in-house.

Take Control of Your Agency’s Finances with Expert Accounting

If your marketing agency needs help with its accounting and bookkeeping, consider Graphite Financial, a leader in agency accounting.. As experienced professionals who specialize in accounting for marketing agencies, we pride ourselves on offering more than just high-level bookkeeping & financial forecasting, but a range of value-added services to help your agency prosper – and all at a significant cost advantage than if you were to bring your own team in-house. Furthermore, you can ensure that you’re working with dedicated professionals who are experts in all things accounting. You won’t have to rely on someone who works at your marketing agency to perform multiple roles or to reach outside their comfort zone to handle the financials.

To learn more about how Graphite Financial can help you with your marketing agency accounting, contact us today. We offer free consultations and have flexible pricing plans. Learn more by scheduling an appointment with us today.

FAQs

You have questions about accounting practices for marketing agencies. We have the answers. Read on to learn more:

Why is accurate bookkeeping crucial for marketing agencies?

Accurate bookkeeping is crucial for any type of firm, business or company, but it’s especially important for marketing agencies because of how complex their business structure can be. Marketing agencies often service a variety of clients, running campaigns for these clients. It’s not just important to keep these various accounts separate from one another, but it’s important to be able to properly gauge the return on investment associated with each campaign.

What are the best accounting practices for marketing firms?

Some of the best practices to follow for marketing agencies include gains and spending observation, capital movement, forecasting and generation of financial reports.

How can marketing agencies effectively track ROI in their campaigns?

Return on investment, or ROI, is important for marketing agencies to track when it comes to transparency with clients and partners pertaining to how their respective campaigns performed. The main formula for calculating ROI for a marketing agency campaign is:

• (revenue – expenses)/campaign expenses

What are the common bookkeeping errors in marketing agencies and how to avoid them?

From under-estimating cash flow needs to misclassifying expenses to failure to divide individual and business money, there are a number of errors that can foil an agency’s accounting. The best way to avoid some of these common mistakes is to work with accountants or bookkeepers who know what they’re doing and can ensure accuracy with your finances. It’s also important to keep records of all transactions and ensure you’re regularly reviewing financial documents with your team.

What accounting structures are best suited for the marketing sector?

There are two main accounting practices that most marketing firms abide by: single-entry and double-entry. Single-entry is a more simple accounting method to monitor core economic activities, while double-entry gauges the credit of at least two accounts. There are pros and cons to each method.

How can automation tools improve accounting processes in marketing agencies?

Automation can help improve accounting processes in marketing agencies the same way it can help improve operations in every other practice – by allowing professionals to make faster, smarter decisions.