Proper financial management is a must for an advertising agency to stay healthy and competitive. Here’s how to do this management!
When thinking about the steps of financial management, it is very important to understand how it applies to the reality of an advertising agency. In this sense, you should pay extra attention to one of the most relevant situations: the relationship between accounts payable and accounts receivable of a company of this type.
In general, agencies offer extended payment terms to their clients. At the same time, expenses such as employee salaries, rent for agency space, software monthly fees and other costs usually occur before these payments are received.
This means that the agency must have sufficient working capital to cover its bills each month. By adopting this measure, it is possible to ensure that resources are available to maintain operations.
Moreover, the added costs of certain projects are usually absorbed by the advertising agencies. In this case, the agency might hire photographers, filming companies, models, and freelancers for a project. All these would be paid later.
Thus, it is really essential to have a healthy cash flow to honor all these commitments. Otherwise, debt will be left to affect the agency.
Furthermore, it is worth considering that advertising agencies can be impacted by seasonality in customer acquisition.
In times of economic crisis, for example, advertising budgets tend to be reduced by many clients. As a result, agencies need robust financial management to be able to withstand the challenges of difficult times.
Why is it important to manage an agency’s finances?
As you have seen, business management of financial resources is essential to keep any business running. In the case of advertising agencies, this step can be even more important.
By identifying financial data and strategic decisions, there is greater availability of money to meet obligations. Therefore, management helps to mitigate financial risks of debt or interruption of activities.
With this management solution, it is also possible to identify opportunities related to the use of money. This measure allows you to understand which services are most profitable or which tasks can be eliminated among the solutions offered.
How to manage finances in advertising agencies?
Now that you know the significance of financial management for advertising agencies, it’s important to learn how to do it. That practice can turn into a strategic differentiator in favor of your business results and raise your probability of success.
Next, check out how to carry out financial management at your agency and see what should be a priority in this process!
Take care of data analysis and management
It is a common practice to use data in making decisions in the advertising world. Using this data, it will be easier to have a clear understanding of the audience, helping to structure the use of resources. In the case of financial management, it provides guidance for choices with a higher tendency of success related to the usage of money.
That’s why good financial planning involves the use of data. This way, it’s possible to identify where the main problems lie, such as higher expenses or even losses.
Develop a complete financial plan
In the financial management of advertising agencies, it is also essential to develop a robust financial plan. In this case, the idea is not only to select the necessary tools, such as the projected cash flow , but also to define the financial objectives.
Therefore, planning is one of the most important elements for structuring complete financial management for the business.
Pay extra attention to the cashier
As you have seen, advertising agencies can experience cash flow problems. If major clients take a little longer to make payments, for example, the company could be affected.
To reduce the risk of this happening, it is essential to manage your cash flow strategically. With the necessary amount available in your account, the amount can help cover operations in the event of emergencies or default.
Therefore, it is interesting to use tools such as cash flow and projected flow. This way, you know what to expect in terms of financial inflows and outflows over time, which can help you with your planning.
Automate financial management processes
It is common for advertising agencies to use digital resources to improve communication or to deliver the services they provide. However, it is possible to make the business even more digital, increasing reliability and the integration of financial information.
For this to be feasible, it is interesting to automate financial management processes. In practice, having software focused on corporate finances is an advantageous alternative.