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If you’re a digital marketing agency, your primary focus is creating marketing campaigns for your clients. Along with the campaigns comes managing your financial data and bookkeeping. Keeping financial books ensures you’re in compliance with the tax laws and know your financial position. Bookkeeping isn’t a specialty of digital marketing agencies, and you may need a helping hand, so we’ve put up these tips to help you understand your agency’s bookkeeping processes and manage your finances effectively.
What Is Bookkeeping?
Bookkeeping is the process of tracking and recording the financial transactions of a business. These records must be supported by proper documentation such as bills, invoices, and receipts. The functions of bookkeeping are to:
- Record financial transactions
- Process payroll
- Post debits and credits to journals
- Prepare financial statements
With proper bookkeeping, digital marketing agencies can track all their financial information on the books to make key financial decisions and closely monitor their financial capabilities. The following booking tips will help you have a good picture of your financial position and give you a scalable business without much effort.
- Contract a Professional Bookkeeper
As a digital marketing agency, you’ll benefit from an outsourced professional bookkeeper like Pherrus Financial in many ways. Outsourcing bookkeeping services will improve your business’ processes, as only trained professionals will be working on your financial data. In addition, outsourcing will save you time, which you can spend on other company activities that generate more revenue.
- Keep Business and Personal Expenses Separate
Many small businesses like digital marketing agencies often combine business and personal expenses. This creates a bookkeeping challenge because of the difficulty in tracing business-only financial transactions. Such disorganization can repel investors and lenders.
- Record and Keep Track of Every Expense
Many startups or small business owners remember what they didn’t record during tax time. By that time, it’s too late, and they can’t trace the financial documents. This is why it’s critical to track all financial transactions and keep the document records such as receipts, check copies, deposit slips, contracts, tax certificates, and cash flow evidence. Record all company assets such as computer hardware, software, office equipment, furniture, and phones. Maintaining these records will help your bookkeeping and give your complete records or your company assets.
- Set Aside Time for Bookkeeping, Review, and Update
Assuming you’re doing your books alone, you need to set aside time regularly, every day or weekly to record all transactions or update some. You’ll also need sufficient time to register or follow up on receivables, pay invoices, pay your bills, record employee time, deposit checks, and reconcile accounts every month. If you’re having someone keep your books, you still need to review them in detail for accuracy, review financial reports and statements and monitor the businesses’ cash flow situation.
- Automate Your Accounts Payable
Automating accounts payables save significant bookkeeping time in follow-ups and customer reviews. To make this easier, you can use bookkeeping software that will automate invoice payments and keep track of the customer’s payment history and the company’s financial history. Software like QuickBooks Online or Xero can automatically upload your payables into your system, from where you can choose which invoices to pay. By automating payables, you’ll better control your cash outflow and ensure that your vendors or bills are paid on time.
- Use Pre-Authorized Debits for Accounts Receivable
You can equally automate accounts receivable as you did accounts payables by using pre-authorized debits to collect payments. This may also need the use of some bookkeeping software. This will help you ensure that clients pay on time and keep you on top of your cash-inflow. It also helps save you time, since you won’t deal with late payments or inaccurate invoices. Remember automating accounts receivable or payable may still need you to outsource a professional bookkeeper who understands how to use them well.
- Reporting
Reporting your financial position is as good as keeping track of your financial accounts in bookkeeping. It will help you assess and understand your financial position. As a digital marketing agency, the report should detail your sales, expenses, large customers, taxes, improvements, billable time spent on projects, and revenue to help you predict future profitability. The report will give you an insight into your company’s current performance against the targets.
Endnote
You’ll gain numerous benefits from these bookkeeping tips to improve your digital marketing agency’s transaction records. It will save you time and money, ensure the timeliness and accuracy of your agency’s financial numbers, and keep you updated on your financial position. This way, you’ll get important financial visibility to help you make important financial and business decisions.