32:7 Managing your agency finances - Lee Matthew Jackson
32:7 Managing your agency finances - Lee Matthew Jackson

32:7 Managing your agency finances

Do you know what is in your bank account, who owes you what, and what you have to pay out? It’s likely you don’t as running an agency is time intensive and demanding.

Lee Matthew Jackson
Lee Matthew Jackson

Do you know what is in your bank account, who owes you what, and what you have to pay out? It’s likely you don’t as running an agency is time intensive and demanding. Finances become something we dread at the end of our financial year as we hand over a box of receipts to our accountants, unsure if we will be able to pay our tax bills.

Lee Matthew Jackson - Trailblazer FM ™


Lee Matthew Jackson

Trailblazer FM ™

It need not be like that. In today’s episode I am going to talk you through a very simple framework for managing the financial health of your business.

In this episode we:

  • Explore the impact of poor management
  • Spending decisions
  • Cashflow
  • Mental health
  • Review our simple finance process
  • Quotes
  • Invoicing
  • Reconciling
  • Expenses
  • Discuss responsibilities
  • Who should do what
  • What you should outsource
  • Recommend management tools
  • Dubsado
  • Plutio
  • Freshbooks
  • Accounting tools
  • Quickbooks
  • Xero
  • Sage Online
  • Share best practices that have helped us
  • Follow up tasks
  • Reports
  • Reviews
  • Automation

If you would like to control your money, rather than your money controlling you, then this episode is for you! No previous finance skill needed.


Kyle Van Deusen of the Admin Bar – click here.

32:3 How to manage leads – click here.


Lee Matthew Jackson: Welcome to the Agency Trailblazer Podcast. This is your host Lee and today I want to talk about managing your finances. I promise this is not going to be a boring episode. This is actually going to be one of those episodes where you listen to one of the most boring sounding subjects and then you realize how darned important it is that you get your act together and get all of this sorted out. And the cool thing is that there’s not too much to do either. It just involves a little bit of logic, a little bit of process, and you really can rest at ease because you have gotten back control of your finances.

So first of all, let’s just talk about finances and agency life in general. We’ve heard of the phrase feast or famine or feast and famine. I’m never quite sure which way round that is, but essentially that is when you’ve got a whole lot of work coming in and that is freaking awesome. You can pay your bills, you know that all this money’s coming in, you feel great, and then suddenly you come to the end of those projects and you have no money and you’ve got to try and fill that gap. You’ve got staff to pay, you’ve got bills to pay, all of that sort of stuff and it’s really stressful.

Now, a lot of agency owners, including myself for many years, operate on that feast or famine mythology, but also they don’t really understand in general the overall financial health of their business. So, if I was to say to you right now, do you know how much you turned over last year? You may or may not know that quickly. You may know that off the top of your head. That’s freaking awesome. Or you may have to go and look it up, or you may not even know where to go and look that up.

Now, if you’re in those categories, that’s worrying and if you know what you turned over but actually don’t know what profit you made, then again, that’s a worry. You are the business owner of your agencies, it’s your responsibility to ensure that your agency is healthy, that you have a good looking pipeline so that you can be bringing money into the business so that you can be that to service you yourself. That’s your life, but also your employees and also your clients. And let’s just explore some of the impacts of poor money management. We’ve already pointed out the stress of feast and famine, but when you don’t have a control of your finances, when you don’t understand what is coming in or how much things are going to cost you or when you’re going to get paid, that’s really going to affect your spending decisions. You’re not really going to know if you can invest in that new software.

Many times we’ll have conversations in our marketing department and say, great, we need to spend X amount of pounds on a Facebook marketing campaign. Now, if we don’t know our finances, then why and how are we making those particular decisions? Take a look at your AppSumo bill. I bet you’ve probably spent an awful lot this year. I know I have on random AppSumo deals, but without actually consulting your finances, without actually understanding whether this was a decision that’s going to help your business or hinder your business. My mate Kyle Van Dusen shared only the other day that he was able to save his agency hundreds of dollars on subscriptions for things that he just was not utilizing or they weren’t delivering the results that he was expecting. So not only could you be wasting money, but you may also not be investing in things that you should do and you actually have the cash for because you’re not confident, you’re not a hundred percent sure how much is coming in next month.

You don’t know if you’re going to be able to afford this. I had many occasions years ago when a social media specialist would give me a quote for social media management and it would sound reasonable. It may be 300 or 400 pounds a month, et cetera, but I had no real idea if I was going to be able to afford this. I had no real plan for that and it would stress me out and in fact I would actually say no in the end because I wasn’t sure my decisions on what I would invest my money on would be very much based on what I saw was in the bank at that very moment in time. How generally confident I kind of felt about the health of my business and I would make some really bad decisions.

Now I mentioned that I would look at my bank account and that would be how I would make some of my spending decisions. The problem is I had no understanding either of the cashflow, so I didn’t know what was coming in or perhaps what was going to be going out. So maybe I had five, maybe I had 10 maybe there was even 20 grand in there, but perhaps five grand had to go out, perhaps another 10 grand needed to go out on wages and perhaps only five grand was coming in, but I had no idea. So I was making decisions based on that and that was damaging my cashflow.

Then finally for me at least, it’s just the mental health aspect of it. You can’t make good decisions. You don’t know what the cashflow looks like and at the back of your mind you’re constantly worried about your agency. Do I have enough business coming in in a few months? Do I have enough money right now to pay salaries? Do I have enough money to pay bills? What if something goes wrong? Do I have enough money? And it’s one of those things that may be is not in the forefront of your mind, but if you evaluate and have a look at yourself, maybe it is something that is that deep down that could be concerning you and those sorts of worries that just eats away at you can be really, really bad just for your overall happiness. And this is something that is so easy to fix. We can put in a simple financial process to make sure that we as agencies are looking after our businesses, thus looking after those spending decisions, that cashflow and our mental health.

So, let me share with you our process. At any point, if you want to follow through this episode, just go to the show notes because I’ve bulleted the whole thing down for you so you can work your way through. So, we have four key areas in our finance process that we will look after. The first one is our quotes. So, we need to have somewhere to store all of the quotes, the estimates that we’ve put out there, they act as our opportunities. We can see at a glance that there is X amount of thousands of pounds of potential revenue for our business. And then that gives us something that we can work on and try and convert those quotes into converted projects which we can invoice upon. So, you always want to make sure you have those quotes and you would be listening to perhaps the lead management episode I did a few weeks ago that might help you as well to understand the process of that. But having those quotes in your system and regularly reviewing them and closing off anything that’s expired or working on those things that you feel like you can convert.

So that’s your initial thing. Quotes, having those stored in one place. Next is your invoicing, so it’s understanding when those quotes are converted, you need to have a track of your invoices. And what we do is we create all of the invoices in advance. There’s two different ways that we will invoice on a signed off quote or signed off project. Number one, we’ll create the stage invoices and then leave the other dates blank on the invoices that we’ve not distributed just to make sure that we never forget to send them. Or alternatively what we will do is we will invoice the entire project in advance, but we will then record stage payments against that invoice. So we will explain to the client what their payment schedule is and there are quite a lot of tools out there that will allow you to provide your client with a payment schedule so that they can pay against that same invoice. The beauty of this is that you can see what is going on and you can see what you’ve invoiced out and also what the projected income is as well. You can see that an invoice has had 50% of it paid, you know the other 50% will be coming in at some point so that allows you to start to predict or project your cashflow.

Now it’s great having all of that, but if you are not doing something called reconciling, then you’re screwed. So what reconciling is, is that means it is checking that those invoices have been paid. That means going into the bank essentially and having it look not physically, but going and having a look at your bank and making sure that that payment has been received against that invoice and that you’ve marked that payment against the invoice in your accounting system so that you can see at a glance all of the invoices that are paid and all of the invoices that you potentially need to chase. When you come and circle back for a view and have a look at your invoices you might be in the position that I was in a few years ago where I would send snotty emails to people chasing an invoice and then it would turn out they had paid weeks ago and I had just never reconciled it and that’s bad because it’s bad for me. It’s money I thought I had coming in that I’d already had an already spent, but it’s also bad for the client relationship because I wasn’t keeping on top of my game and therefore I was upsetting a client because I was telling them they owed me thousands of pounds when they’d already paid and that caused them some unnecessary stress as well.

The final area as well that we want to be managing is our expenses. And I think this is one of the biggest bug bears in most agencies and that’s lost receipts and I am the worst for this. So I would recommend that you find some way of tracking your expenses that works really well for you and that potentially is taking a picture of that receipt as soon as that receipt is in your hand and sending it to somebody to do something with it. That’s exactly what I do. I have my receipt, I take a picture of it, it goes onto our shared drive and there’s somebody else does something with it because I am ridiculously bad at looking after receipts. However, those receipts are therefore entered into our system and we can now start to build up a picture of how much we have spent and also I can claim necessary expenses if I need to. The other cool thing about that is I can see who is spending what and whether we might be overspending.

So, let’s just walk through those again. So, we’ve got our quotes that’s managing what we are potentially going to sell to people and we’re going to try and convert those quotes into sales. Once we have the sale, we now want to track our invoicing, we’re sending our invoices out and then we’d go into the next stage which is reconciling those invoices. So as those payments come in we’re going to mark those payments against our invoices to make sure we know it’s being paid and also to highlight those ones that haven’t so that we can make sure we chase anyone who is taking the mick and has not paid as beyond whatever the terms are.

Now, speaking of terms, I would always recommend you put say a 15 day or even a less day terms if you can. We’ve got a payment on receipt because 30 days we’re not a credit agency, we expect payment. And finally for the tracking of expenses, which is kind of separate to all of those elements in a way, making sure that your expenses all entered in ASAP because they are things that are costing you money and remember expenses aren’t just the receipts that you are looking after as you buy the meal for a client and schmooze them and all that sort of thing. But also the other expenses are things like your rent for the property or the cost of technology or insurances and any other bills. All of those expenses need to go into a system of some sort because you’re now going to be able to see how much you’ve invoiced, how much has been paid so far, and also how much you have spent and that’s going to give you that magic number of profit which all businesses need to survive.

Now, I’m really sorry if this is absolutely simple. I think we all get what I’m talking about. The problem is, is most of us aren’t doing anything about it and want to remind you, listen back, if you’re not convinced, listen back to what we shared earlier in this episode about those bad spending decisions you’re probably having to make about the stress of the cash flow, the mental health impact, et cetera, and then perhaps resolve today to put some sort of process in place to manage your quotes, your invoices, your reconciliation and your expenses.

Now let’s talk about responsibilities because I imagine this feels overwhelming. You’re already running a busy agency. You already have so much demand on your time and now I’m on this podcast telling you that you got to sort out your finances and yes, it’s true, but there are things that you can do, responsibilities that you can assign to other people as well to ensure that these things get done. Now I mentioned that my expenses will get managed by other people as my personal expenses. I will make sure that gets handed off and you can do the same sorts of things. So, let’s just talk through top to bottom. Now for us in our business, and you may need to change this for you, but for us, I and my account managers will manage all of the quotes. So, we will send the quotes out, we will adjust them, we will negotiate, we’ll move those up and down until we finally get the sale.

We will also then do the initial invoice and fill in that information and that’s then where our responsibility will stop. What then happens is we have handed over the responsibility of reconciling those invoices to our accounts team. So, this is a third-party company, but if you’re a larger agency, you may actually have an in-house accountant who is checking the bank on a regular basis. So, our accounts team are checking our accounts once a week and they are reconciling payments that have come into the bank against invoices in our system. So that means at the end of each week, I know who still owes me money, I know what’s been paid, et cetera. So that responsibility has been assigned out. That’s something I don’t have to worry about. And it’s something that I know gets done. And finally, that all your expenses, and for me this is the same team who are responsible for this.

I will be scanning my personal expenses in and sending them in and they will add those into the system and check them against the bank. But equally any other bills, so the rent for the office, the insurance payments and also my staff salaries, et cetera, is all managed by the same accounts team so that I don’t have to overwhelm myself with that. I don’t have to try and be all things to all people. And of course it’s the same company who are looking after my end of year accounts as well. This also means they can flag up any potential problems with me allowing me to be more proactive in my own business. So can I encourage you before we come into land to look at what you can do to remain on top of your finances, but also ensure that you have the right team in place, either internally or externally, that can handle all of those extra pieces to ensure you’ve got that clear picture.

Now I want to share some tools and then we will finish with a few best practices to help you out. I’m only going to share with your tools that we’ve experienced either ourselves or with our clients, but it should give you an idea of the sorts of tools you might want to look for. So first of all, let’s look at a CRM system or a BMS business management system. I’ve heard them called that before, and a first example would be Plutio. That’s something that came out recently on AppSumo as a lifetime deal. It’s kind of an up and coming platform and it allows people to send quotes and proposals, convert to invoices, et cetera. So that’s a pretty cool system for keeping on top of those quotes and doing your initial invoices. I believe also something like Better Proposals can allow for that. For a couple of years in our agency, we used Dubsado, which actually integrated with our accounting platform and allowed us to create those proposals, send out those quotes, also convert those to invoices, do automated billing and manage a whole load of templates and workflows as well, which was really, really helpful.

So that’s well worth a checkout. Then finally from this section might be something like FreshBooks. It’s more focused I guess on smaller agencies or freelancers and it might completely negate the need for you to have an accounting platform depending on where you live in the world. But it’s a very robust system. Again, that allows you to send out those quotes, invoices, take money, et cetera, and to some valuable reporting. So those are a few tools that you can be checking out. Also check out the episode where I talk about managing your leads because I share a few other tools in that and I’ll make sure that there is a link in the show notes to that episode.

Then accounting tools, these are way you will manage all of your money, allow yourself to see what is going on in your bank account, but also in your business, what is owed, et cetera, and the ones that we’ve had experience with are QuickBooks, Xero or Sage online. All of them having integrations with third parties to allow for automation, et cetera, and also multiple accounts again to allow multiple people to manage those. Now we’ve got everything in our QuickBooks, which means that we know by the end of the year when the financial year comes and the tax man comes knocking we’ve got everything in there and our accounts team can now put together the necessary reports, the necessary details to give to the tax man so that I can happily with a smile, pay my tax bill and that’s why you need a really good accounts platform or some sort of system even if it’s the best, most organized spreadsheet on earth. Yeah, just need everything down somewhere.

All right, finally, let’s wrap up with some best practices and then we will say goodbye. Best practice. Number one, set yourself, follow up tasks and that’s with regards to your quotes and also to invoicing. With your quotes, if you send a quote out, set yourself a f a follow-up task to follow up with that person a few days later to see whether or not they want to go ahead with a business that’s going to keep you on your toes and help you to convert that quote. Again with an invoice, if you send an invoice out, set yourself a follow-up task to check whether or not that invoice has been reconciled. If it hasn’t, maybe double check with the accounts team and then potentially you can follow up with a client to see when payment is coming in, so that’s really helpful.

Another best practice would be check your reports regularly, maybe once a week or once a month. Take a look at the reports in your accounting system and as long as the information is as up to date as possible, say maybe by a week, then you can at least get a relatively healthy picture on the state of your business. That’s how much money you have in. That’s how much money you have coming in and also things like sales, what your projected sales would be if you are able to convert them, et cetera. So that’s going to give you what you need when you’re making those, purchasing, those hiring decisions because you have access to that data in your account system and you want to review that regularly. Expanding upon a review, you should also be talking with a professional, maybe your accountant on a regular basis, maybe once a quarter to take a look at those reports to take a look at the health of your business and to get relevant advice.

Then finally, best practice number three or four depending on what you count. The last one as would be some form of automation. I think I’ve shared this on a podcast before. We do a lot of the automation that we can when it comes to online transactions. So that means that we can do the whole bankruptcy reconciliation process through a connection with Zappier and into QuickBooks so that we’re saving everybody on our team time. Once somebody has paid, say through Stripe, we know we’ve got the payment, we know we’ve got the authorization, et cetera, and then we can transfer all of that data into our accounts package. That’s saving everyone time, so have a look. Is there anything that you can automate in your business?

Right. Let’s do the patented Lee Matthew Jackson recap. Number one, we talked about the impact of poor money management on your business. It affects your spending, your hiring decisions. It affects your cashflow. It can affect your mental health. We talked about the general process that a business would go through, which is they do quoting, they do invoicing, they reconcile those invoice and they manage all of their costs, expenses, etc.

We talked about the responsibilities of who should be doing what, including who should be sending out the quotes and the invoicing and who should be reconciling those invoices and tracking all of that stuff in an accounts package. We then moved on to a few recommended tools that we’ve had experience with as well as a podcast episode that you should probably go ahead and check out with regards to lead management and then we wrapped up with some best practices which included follow-up tasks on invoices and quotes. We talked about looking at your reports. We talked about having a regular financial review with an expert and we also talked about automating what you can. All of these are things that we apply to our business so that I know I have a healthy business and I know I need to do something when things are not looking good.

I’m going to wrap up this podcast by saying that if you would like control of your money rather than your money controlling you, then please take some time, invest in yourself, invest in your business and get your finances nailed.

Folks, this podcast is sponsored by Cloudways. I love that I can scale the platforms to meet demand. That also allows me to control those expenses. It gives me reports and I can pass relevant costs on to my clients. So be sure to check out Cloudways. We also do a monthly website review, so join the cloud ways user group that will be a link in the description of this podcast. Come and join us in that community there and find out what is going on every single month with me and the other Cloudways my breaks as we unpack what people are doing right, as well as what people are doing wrong with websites and let’s learn together as a community. Finally, we have our own community over at trailblazer.fm/group that will send you to our free Facebook group. Come and join the fun and there we will either see you in the groups or we will see you in next week’s episode.


PodcastSeason 32

Lee Matthew Jackson

Content creator, speaker & event organiser. #MyLifesAMusical #EventProfs