If you’re an owner of a product marketing agency, you’ve likely asked yourself at least once – how do I stay on top of my accounting? What are the most important things I should pay attention to?
Well, we’re here to explain it all to you. Don’t worry – we will break it down in simple, understandable terms. These 6 tips are:
- Understand your client’s business model inside out
- Choose the right accounting software
- Separate business and personal finances
- Stay up-to-date with tax regulations
- Ensure accurate invoicing
- Monitor your expenses
Let’s take a closer look at each step!
1. Understand your client’s business model inside out
We’ll begin with the basics. Different products impact a business model in different ways, which directly affects how you manage and account for revenue.
For example, if your client sells one-time purchase products (kitchen gadgets, books, etc.), the revenue is straightforward. Each sale is a one-time transaction that can be easily tracked. Your focus here would be on maximizing profit margins and managing inventory costs.
On the other hand, if your client offers subscription-based products, the revenue model is more complex. You’ll need to account for recurring income, manage churn rates (when customers cancel their subscriptions), and track long-term customer value.
This requires a different approach to your accounting practices. You’ll have to use accrual accounting to recognize revenue over time. You must also closely monitor cash flow to ensure the recurring revenue sustains the business.
2. Choose the right accounting software
The right accounting software will help you keep track of your finances accurately and save time on manual bookkeeping. Some of the best accounting software you can find today are Intuit QuickBooks, Zoho Books, FreshBooks, Xero, and AccountEdge Pro.
Intuit QuickBooks
Intuit QuickBooks offers a wide range of features that cover almost everything your product marketing agency might need. You can track sales and expenses, manage bills, and more. It’s especially great for agencies wanting an all-in-one tool.
Zoho Books
Zoho Books is an excellent choice if you’re looking for cost-effective software. It offers basic accounting features for free, making it perfect for startups or small product marketing agencies. You can manage invoices and bills and track expenses without spending a penny.
FreshBooks
FreshBooks stands out for its user-friendly interface. If accounting seems confusing to you, this software makes it simple. You can easily create professional-looking invoices, track time for projects, and manage expenses.
Xero
Xero is ideal if you need advanced accounting features. It offers detailed financial reports and multi-currency support and can integrate with many apps. It’s perfect if you’re looking for software that grows with your agency.
AccountEdge Pro
If you deal with a lot of products, AccountEdge Pro is a fantastic choice. It excels in inventory management, allowing you to track stock levels, set reorder points, and manage orders efficiently.
3. Separate business and personal finances
It’s super important to keep your business and personal finances apart. Think of them as two different worlds that shouldn’t mix – here’s why.
First, separating your finances makes your life easier during tax time. When everything business-related is in one account, and personal stuff is in another, you won’t have to spend hours figuring out which expenses were for business and which were personal. This saves you lots of time.
Next, it protects your personal assets. If your product marketing agency ever faces financial trouble or legal issues, having separate finances means your personal savings, house, or car are completely safe.
Lastly, it looks professional. When clients make payments, they’ll see the business’s name on invoices and transactions, not your personal name. This shows you’re serious about your business.
4. Stay up-to-date with tax regulations
Tax laws change pretty often, and staying updated means you won’t miss out on new chances to save money or gain benefits for your business.
For example, there might be new tax deductions you can claim that lower how much tax you owe. Or, there could be changes in how you’re supposed to report your income, which, if done wrong, could lead to penalties.
By staying informed, you make sure you’re paying the right amount of tax, not more, not less.
This is also about planning ahead. When you know about tax changes in advance, you can make good decisions about spending and saving.
Maybe you decide to invest in new equipment now because it will give you a tax break. Or perhaps you hold off on a big purchase until next year when it will benefit you more tax-wise.
Also, being knowledgeable about taxes shows your clients and competitors that you’re serious about your actions. It builds trust because it shows you’re doing things by the book.
5. Ensure accurate invoicing
Accurate invoicing is crucial for maintaining healthy cash flow and retaining happy clients. Here’s what you should do.
Double-check client details
Make sure you have the correct names, addresses, and contact information on each invoice. Getting these details right shows professionalism and helps avoid payment delays.
Use clear descriptions
Write down exactly what the client is paying for in simple terms. If you designed a logo or ran a social media campaign, say so. This avoids confusion and questions, making it easier for clients to approve and pay the invoice.
Include all relevant dates
Mention the invoice date and the payment due date clearly. This sets expectations for when you expect to be paid and helps clients manage their own finances better. It will lead to quicker payments for you.
Itemize services and products
Break down the bill into specific services or products provided. This transparency builds trust. Clients like to see exactly where their money is going, and it can also remind them of the value they’re getting.
Apply the correct tax rates
If taxes apply, make sure you’re using the right rates based on your location and the nature of the services. Incorrect tax calculations can lead to legal issues and upset clients.
Offer multiple payment methods
The easier it is for clients to pay, the faster you’ll get your money. Offer various payment options like bank transfers, credit cards, or online payment systems.
Number your invoices
Use a consistent numbering system for your invoices. This makes it easier for you to track payments and for clients to reference specific invoices if they have questions or need to make a payment.
Review before sending
Always give your invoices a final check before they go out. This step ensures you haven’t missed anything and everything looks professional. A mistake-free invoice reflects well on your product marketing agency and helps avoid payment delays.
6. Monitor your expenses
Every week or month, take some time to go over your expenses. Ask yourself if each expense was really necessary and how it helped your agency.
Also, plan a budget for different areas of your business, like marketing, payroll, and office costs. This is your spending plan. Try to stick to this plan as closely as you can.
If you see you’re spending more than you planned, figure out why and adjust your plan or your spending.
By doing these things, you’ll always know where your money is going, and you can make sure you’re spending it in the best way possible.
And that wraps it up! We hope we helped you better understand how to manage your accounting and keep an eye on all the financials of your product marketing agency.
Remember – if you’re ever unsure what to do or need help with taxes, consulting with a tax professional could be a smart move. We wish you the best of luck with your business!
