Why do digital agencies need a finance director?

Why do digital agencies need a finance director?

Unless you’re lucky enough to have the budget for a full-time finance director on your agency team, the chances are the role falls to you as a director. This may be OK in the early days, but if you’re too busy juggling numbers to spend time on your growth strategy, or you’ve reached the limit of your accounting ability, what then?

Successful digital agencies maintain positive cash flow, control costs, are tax efficient and use financial data to inform sustainable growth strategies. This level of financial expertise exceeds the budget of many agencies, which is where an outsourced Finance Director comes in.

Even if you’ve enjoyed early growth, if you are not in control of your numbers, your digital agency will begin to plateau sooner rather than later. A finance expert can provide the support, tools and leadership to gain control of your agency’s finances and set you on the path to business growth. Read on for details on how an FD can help you to realise your ambitions – and then some.

If you are a digital marketing agency director looking to outsource your finance function, then contact Finance Cornerstone for a free discovery call. Not only do we have years of financial leadership under our belt, but specific industry knowledge to help your digital agency break through the £1m barrier.

What are the benefits of outsourced financial directors?

An experienced digital agency finance director possesses a great deal of business acumen, strategic skill and technical knowledge. They also have the qualities of a confident and inspiring leader. They exist to improve a company’s financial health, help it gain a competitive advantage, become more profitable, scale and reach its full potential.

If that sounds like an expensive set of skills, it’s because it is. Most agencies don’t have the luxury of hiring an experienced FD in-house. While you absolutely should hire a good accountant (either in-house or outsourced), if you’ve got your sights set on growing your digital marketing agency, then you will benefit a great deal from the expertise of an outsourced FD.

We can take a step back and assess the bigger picture, which most directors are either too close or too busy to do. With an impartial view of your company’s financial situation, your FD can help you to put your house in order, identify your opportunities and give you the tools and impetus to go out and get them.

What can outsourced FDs do for digital agencies?

The ultimate goal of an FD is to enable a business to grow. I rarely come across a digital agency owner that doesn’t have the ambition to grow, but few have the budget to invest in the financial expertise to get them there.

An outsourced finance director proves a lucrative investment for many businesses, helping them to build a solid financial foundation, visualise what success looks like and put plans in place to get there.

You can look at this as a (broadly) three-stage process.

#1 LAYING THE FOUNDATIONS

To get to a point where growth is not only possible but sustainable and profitable, a finance director will work with your numbers people to examine your figures at a granular level.

So this is where we start:

Implementation of internal systems

If you don’t have a robust accounting system, then growth will lead to an uncomfortable state of chaos for you and your stretched team. An FD can help you to put systems, processes and accounting software in place to pull your finances into focus.

Cash flow management

I meet quite a few agency owners that are making a decent profit but regularly dip into their own savings when company cash evaporates. If you don’t have enough money each month to cover operational costs, then you need help with your cash flow fast.

Annual reporting

The thought of annual reports is a source of dread for many agencies. If that includes you, then you’re likely neglecting basic accounting tasks. An FD will shake up your day-to-day accounting to ensure you’re ready for your annual submission to HMRC and Companies House.

Cost saving and tax efficiency

To drive profitability, you need to rid your agency of unnecessary expenditure, which an experienced digital agency FD will spot a mile off. They will also bring their sharp tax expertise to the party to make sure your agency is saving where possible.

#2 SETTING THE BAR

You’re in control of your numbers, so the plan for growing your agency can get going. It’s time to start strategising, aided by your newly-established accounting processes.

Goal setting

It’s essential to put some key performance indicators (KPIs) in place to give you targets to aim for; otherwise, how do you know what success looks like? Your FD will make sure you keep your objectives SMART and help create a roadmap to get there.

Regular financial statements

Monthly management accounts are used by digital agencies to help identify trends and inform budgets and forecasts, i.e. where you’ve been, where you are now and where you’re going.

To put you ahead of the game, Finance Cornerstone recommends producing financial reports on a weekly, monthly and quarterly basis. This will give you the clarity to make more accurate and profitable decisions about how and when to invest and scale.

#3 STAYING ON TRACK

You’re on your way, but how will you make sure your vision becomes a reality? A great outsourced FD is far from just a bean counter. They understand that numbers may light the way, but it’s people that determine the success of the journey.

An FD is a voice of change in an organisation, making sure the leadership team, management team and every last employee is on board with the business plan, aligned to the same goals and fired up to get there.

FAQs about outsourcing a finance director for your digital agency

Digital agencies need the expertise of an outsourced finance director to help manage their finances effectively, as an outsourced FD we often get asked this:

What is the difference between an accountant and a finance director?

Accountants fulfil a crucial role in financial management by maintaining accurate records, helping to keep your agency in the black, taking on the fiddly admin and, to some degree, assisting with financial planning.

Where an FD differs is in terms of financial leadership. An FD exists to drive a company to a more profitable future, using their skills of analysis, strategic thinking and governance.

A good accounting team and an experienced FD is an unbeatable combination for digital agencies looking to scale their business.

Choose Finance Cornerstone as your outsourced financial director

At Finance Cornerstone, we work exclusively with ambitious owner-managed digital agencies. We help them to be in control of their finances and identify the levers for scaling their business to the next level.

We have a proven track record in helping digital agencies to reach their potential. If your company turns over upward of £1m and you need guidance on how to get to your next million, let’s talk.

Further reading:

We use our PROTECT framework to assess the financial health of digital agencies. Take the free test to see how your company measures up.

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