The Guide to Outsourcing Finance: How Marketing Agencies Can Take Control of Their Finance Function

The Guide to Outsourcing Finance: How Marketing Agencies Can Take Control of Their Finance Function

The biggest finance challenges facing marketing agencies today

AMID AN ACUTE FINANCE AND ACCOUNTING TALENT SHORTAGE, AGENCIES

STRUGGLE TO KEEP ON TOP OF THE CHALLENGES INVOLVED IN PROJECT-BASED ACCOUNTING AND TIMELY MONTHLY REPORTING — BUT THERE IS A BETTER WAY.

Agency work has never been easy. Beyond the tight timelines and client expectations, project-based accounting presents unique challenges. Since this type of accounting requires more administrative upkeep, marketing agencies can easily get bogged down in transactional tasks, postponing higherorder finance and accounting work that would positively impact their businesses.

To succeed in today’s competitive landscape, marketing agencies need efficient and accurate project accounting to help them understand their profitability. They also need month-end reporting (that actually happens at the month’s end) to ensure management has the information they need to make key financial decisions.

Getting to a place where your business can prioritize these key finance tasks requires rethinking your processes, eliminating silos between your accounting and marketing teams, and finding efficient strategies for handling all the extra administrative tasks involved in billing for projectbased work. However, with nearly 90% of companies struggling to fill finance and accounting roles, many marketing and advertising agencies are having challenges getting the support they need to develop a mature finance solution.

One solution gaining popularity is outsourcing your finance and accounting functions. The term accounting outsourcing may bring to mind a bookkeeper or tax accountant closing out the books to prepare tax returns — but in reality, it is so much more.

This guide will explore the depth of services a marketing agency can effectively and seamlessly outsource, and how it can profoundly affect the insights, transparency, and decision making capabilities of your organization.

Three key signs your marketing agency should consider outsourcing finance

1

YOUR BACK-OFFICE FUNCTIONS ARE EATING UP A SIGNIFICANT AMOUNT OF TIME AND RESOURCES.

Effective project accounting requires a consistent flow of information from your marketing team. Your finance and accounting team needs to be aware of project start and end dates, status, and change orders.

Understanding these milestones is crucial to producing accurate financials at period end, but if this information is not easily accessible, your team can waste a lot of time tracking it down — leaving little time for other reporting work that would help you understand the health of your business.

2

YOU ARE MISSING DETAILED, UP-TO-DATE DATA ON PERFORMANCE SO YOU CAN MAKE BETTER DECISIONS FOR YOUR BUSINESS.

At many agencies, revenue, costs, and gross profit are not tracked at the project level. In project-based accounting, revenue is only recognized in your system when it is invoiced and costs are only recognized when they are incurred. That means you can only track the profitability of a project in hindsight, if at all.

In contrast, mature agencies are looking at their financial and accounting metrics weekly and on an accrual basis. They are checking actual results against their budgets and forecasts to understand whether the business is performing as expected, allowing them to respond to issues as they’re happening, and mitigating project-specific losses.

3

YOU ARE MANAGING INFORMATION ON MULTIPLE, SEGREGATED SYSTEMS AND ARE STRUGGLING TO CONNECT THEM ALL.

Technology is changing rapidly, and it is more difficult than ever to hire in-house talent that has the capabilities to ensure your agency is keeping up. Agencies often use several operating systems to support internal and external tracking, communication, and reporting for both accounting and operations. These systems often do not communicate with one another, causing duplicated data entry and delayed and inaccurate reporting. It's not just a matter of finding individuals — you need well-defined roles and established processes so they can each spend their time on the right functions.

How to strategically outsource your agency’s finance function

For a majority of marketing agencies, outsourcing will be more efficient and effective than hiring full-time staff — providing you access to specialized talent on-demand and allowing you to scale your team up or down as needed, which allows you to more effectively manage a key overhead expense.

And it is growing in popularity: according to recent research, 78 percent of finance and accounting managers in the United States are planning to increase their use of contract professionals, a number that has only been increasing.

But not all outsourcing services are created equal. Some can be true strategic partners, while others can only take a few recurring tasks off your plate. Let’s explore the options in more detail.

Companies that embrace the open-talent model get their work done just as well as those that use traditional staffing models — but four to five times faster and eight to 10 times more cheaply.

— HARVARD BUSINESS REVIEW

Bookkeeping services vs. full-service outsourcing

OUTSOURCED BOOKKEEPING SERVICES

Outsourced bookkeepers provide basic accounting services. They will balance your books, record accounts payable and receivable transactions, reconcile cash, and provide you with a standard balance sheet and profit and loss (P&L) reports. To keep their services low-cost, they standardize their service and technology platform across their clients and try to keep those systems and processes consistent across their client portfolio. For simple business structures with basic accounting needs, this can be a viable low-cost, low-touch option.

FULL-SERVICE OUTSOURCING

A full-service outsourcing model is custom tailored to your agency’s needs. Engaging a solution like this can help you build better processes, achieve a deeper and more insightful level of financial decision-making, and select and integrate the right technology to help you achieve faster, more accurate reporting. They can bring in industry specialists as needed to support or augment your team, stay current on the latest changes to operating best practices, and help train and upskill your existing finance staff.

GOAL TECHNOLOGY OUTPUT

STAFF COST

OUTSOURCED BOOKKEEPER FULL-SERVICE OUTSOURCING CONSULTANCY

Provides a standard monthly balance sheet and P&L sheet

Uses your existing tech stack or onboards you onto a basic system

Employs lower-level staff to perform rote tasks

Provides a low-cost solution for simple businesses

Lower cost for a canned solution

Provides a monthly deliverable that offers decision support, including financial planning and analysis

Creates a customized technology stack and processes based on your specific needs, including system selection and integration

Employs highly specialized professionals who can provide expert advice, training, and best practices tailored to your company and industry

Provides mature finance capabilities to fast-growing agencies

Higher cost for a tailored solution (but considerably cheaper than the multiple full-time roles otherwise needed to achieve these capabilities)

While it is true that not every agency needs to strive for the highest level of financial maturity, not investing in your accounting function can put you behind your competitors and have costly implications in the long run.

If all you need is bookkeeping services, an outsourced bookkeeper can be a great and cost-effective option. However, for growing agencies with any level of financial complexity, you need much faster and more in-depth reporting to be able to make timely, well-informed decisions for your business. Automation of key tasks, better processes and reporting, an accelerated month-end close, and regular forecasting will all help you optimize your profitability in the long run.

Choosing a full-service outsourcing partner can help you achieve just that. Citrin Cooperman has developed effective outsourced solutions to help your agency improve its financial function.

The Citrin Cooperman solution

Our solution to outsourcing finance and accounting allows us to provide all of the capabilities our agency clients need as they manage, grow, and evolve their businesses. We help your finance function become more efficient and effective through people, processes, governance, technology, and data.

To know what is happening within your business in real time, you need reliable data for better decision-making. To grow more profitable, your finance team should be able to anticipate and save up for additional expenses, invest extra money, continuously improve margins, and routinely renogotiate contracts.

Our outsourcing clients typically go from slow, manual processes (a level one or two on the scale below) to fast, in-depth reporting in about 60 days.

PEOPLE

PROCESSES

GOVERNANCE

TECHNOLOGY

DATA

Disconnected people and processes

Ill-defined roles and responsibilities

Manual, timeconsuming processes

Informal and ineffective policies and procedures

Unintegrated systems and data architecture

Limited data which is rarely used

Level 1: SUSTAINS

Steps towards centralization

Defined roles and responsibilities

Fewer manual processes

Defined policies and proceduresand procedures

Common platforms

Ad hoc analysis; manual data cleansing

Level 2: REACTS

Transformation through automation

Well-trained and appropriately deployed staff

Centralized activities

Integrated policies and procedures

Integrated and automated systems

Data is clean, accessible, and easy to use

Level 3: TRANSFORMS

Leadership through innovation

Highly specialized staff

Fully automated processes

Automated governance

Machine learning / artificial intelligence

Predictive analytics

Level 4: INNOVATES

When you choose to work with Citrin Cooperman as your outsourcing partner, you can expect:

1

FINANCE ASSESSMENT (Approximately 3 weeks)

The first step in our process is what we call a finance assessment. During this process, our team evaluates the quality of your documented procedures, the systems you are using, the maturity of your financial reporting, and the level of support the business currently receives from the accounting department. We identify where there might be opportunities for improvement and where there are significant issues or gaps. The result of this phase is a list of recommendations and an implementation roadmap that our team can help you achieve. The leader of this assessment stays engaged afterwards on an ongoing basis.

2

ONBOARDING (First month through first close)

Often, the rapid finance assessment results in the next phase, which focuses on the month-end close process. The month-end close starts with an onboarding phase, at which time we start implementing the findings from the assessment and setting up the delivery structure for our services. This includes:

• Establishing a month-end close checklist

• Documenting standard operating procedures

• Agreeing on financial reporting formats and KPIs

• Setting approval thresholds, workflows, and other key controls

• Onboarding the team who will perform all of the in-scope tasks

• Setting up the monthly deliverable deadlines and collaboration technology used to work with the client’s team

STEADY STATE

Once the foundation for our work together is laid, we establish consistent, monthly communication with your agency. In addition to your engagement lead, we have a team of dedicated staff divided into different functions who work alongside your internal staff. Our documented processes show everyone what is assigned to them. We have digital portals that everyone uses to track their deadlines and other weekly activities.

Our team pursues continuous, incremental improvements to your processes and financial information. We can provide much-needed external perspective so your finance and accounting functions can continue to improve.

DECISION SUPPORT

Our team’s ultimate goal is to provide management with decision support platforms that enable you to make crucial decisions about the direction of your agency. These forward-looking tools include budgets, financial forecasts and re-forecasts, projections, and key performance indicator dashboards. We tailor these analyses to your specific needs and present them in a clear and concise format. Having the right decision-making support system in place is crucial to your agency’s success. Contact us to find out how Citrin Cooperman’s Business Process Outsourcing Practice can

Managing Partner