Every now and then it’s important to take a close look at your agency’s financial practices and see where you can stand to make some improvements. This is a good habit to get into, as it’ll help you maintain financially efficient operations and improve your profitability.
Here are a few examples of some areas to which you should pay particular attention when determining the success of your current financial practices.
Unpaid accounts and invoices
If you find yourself having to wait too long for clients to pay for the work you did for them, this could put you in a cash flow crunch and make it difficult to maintain accurate numbers in your books. Therefore, you should always be aware of outstanding invoices when analyzing your budgets and accounts.
Keeping track of unpaid invoices also helps you know when you need to freeze work. You should have clear practices in place that you can dictate to your clients about when you expect invoices to be turned in, and at what point you will start taking steps as halting work or even sending the client to a collections agency.
Ultimately, your goal should be getting clients to pay up as quickly as possible. But the nature of agencies is that there are always going to be some clients that take a little longer to pay. It’s just important to make sure you don’t let the information for those accounts fall by the wayside.
If you’re not using your staff properly, you could very well see a drop in revenue. The last thing you want is to have staff members sitting around and not being used. There is a delicate balance you need to maintain between stretching the staff too thin and having them underworked.
If you’re using your staff effectively, you’ll find it’s much easier to maintain consistent revenue, which in turn makes it easier to forecast your finances farther into the future. Beyond the financial benefits, it also simply makes for a better work environment. Staff morale will dip if they’re too over- or underworked.
Productivity and efficiency
Productivity and efficiency are closely related to staff utilization.
You might have two employees who have similar utilization levels. But if one is more efficient than other, he or she will be considered to be more productive.
A person who is overworked is not going to be as productive, because they’re going to be worn out. One of the reasons many businesses are able to diagnose staff utilization problems is because they notice a big trending drop in productivity.
Productive workers are highly beneficial for businesses of all types, including creative agencies. The more work you’re able to get done in a single period of time the better, so long as the quality of that work remains at your standards. Business owners want to be able to accomplish he same amount of work while still devoting the same level of resources.
For more information about some of the key factors you’ll want to consider when analyzing your agency’s accounting practices, contact us today at Patin and Associates.