Optimising Agency Finances for Month-End: A Guide to Agency Financial Best Practices

Month-end is when the financial period for any given month ends and revenue, costs, and all other aspects of agency financials need reconciling. While this reconciliation process is in the remit of the finance department, it is up to other agency departments to ensure that they have also completed their responsibilities for the month. Whether submitting timesheets for accurate revenue recognition or ensuring that all costs are captured on jobs, all departments have a role to play when it comes to month-end. 


Christian Arpe-Hansen, Former agency CFO and Tangram Partner shares his tips for a smooth agency month-end. 

Evaluating Job Completion: The Key to Accurate Revenue Recognition at Month-End 

For a robust agency finance department to have a successful month-end, they need to start with an organised timing plan. Each agency department should be aware of its month-end responsibilities and the associated deadlines. There should be no ambiguity; everyone should be clear of the role they play at month-end. 

For example, all staff should be responsible for having their timesheets completed by the date the finance team sets. By doing so, Project Managers can complete their monthly job evaluations as part of their month-end responsibilities.  

However, the month-end responsibilities extend beyond timesheets. Project Managers play a pivotal role in reviewing and validating various elements such as estimates, purchase orders (POs), and invoices. To maintain accuracy and completeness, they must ask important questions: Are all estimates up to date? Have all POs been raised against the job? Have invoices been generated and accounted for? Every step in this process is integral to the overall success of the month-end procedures. 

Once the agency account teams have gone through the process, Project Managers assume a crucial responsibility—evaluating job completion. This is an extremely important step as it directly influences the accurate recognition of revenue. It becomes imperative at this stage for both finance teams and project management teams to exercise caution against overestimating expected revenue. Precision in this assessment ensures a realistic depiction of project outcomes and contributes to solid financial forecasting. 

Revenue Recognition: Is WIP Methodology best practice for agencies?

The short answer is yes. WIP methodology lets you recognise revenue only when you’ve actually earned it, based on the work you’ve done so far. Whereas, using the billing method for recognising revenue means you might end up recognising revenue before you’ve even finished the job. This can lead to months of hard work down the line, but no cash coming in because you’ve already marked it as ‘earned.’ Tangram Partner, Christian Arpe-Hansen shares more on how to improve agency forecasting processes and how to master agency revenue forecasting.  


Managing Change in Agencies: Switching Revenue Recognition

Let’s imagine a small agency kickstarts its journey and opts for Xero and recognise revenue based on billing. Fast forward, and the agency rapidly expands, now boasting a team of 50. The once-effective processes, tailored for the initial startup phase, no longer align with the needs of a thriving and growing agency, especially when it comes to revenue recognition. 

A robust process needs to be put in place to change revenue recognition processes. System-wise, there are a few challenges. However, with the right processes in place before change-over, it is indeed possible. The biggest challenge is usually with agency staff and getting them across the new method and processes. A period of change is inevitable, but managing change in agencies can be done successfully.  

At Tangram, we’ve worked with multiple agencies like this, and you can read more about how design consultancy, Folk wanted to replace Deltek TrafficLIVE, Xero and complex spreadsheets with a fully integrated ERP system. 

Essential Tasks After Revenue Recognition at Month-End

After revenue recognition, there’s still work to be done to ensure financial accuracy. Reconciliation of Accounts Receivable, Accounts Payable, and Work in Progress (WIP) accounts, alongside company bank accounts, is essential. Some agency management software provides a checklist feature, allowing managers to create and assign tasks for month-end reconciliation. This functionality streamlines the process by assigning responsibilities to specific team members, who can then mark tasks as completed and add comments for clarity. This is a great feature in Deltek’s Workbook that helps improve compliance communication within agency teams.  

If your agency management system lacks this feature, implementing a checklist remains a valuable practice. Checklists serve as a comprehensive guide, ensuring that all involved parties have a clear understanding of their month-end responsibilities and tasks. 

Set up a checklist to ensure you don't miss anything

Choosing the Right Enterprise Resource Planning (ERP) Solution

Having the right agency management software is, of course, a given. Without it, in the current business environment, a large percentage of agency time is wasted. Features that allow you to accrue and defer revenue based on effort are necessary for today’s agency. Read How To Choose The Right Agency Management System for guidance or check at the webinar on choosing the right software for your agency.  

These month-end financial practices will be similar across agencies, from indie start-ups to network or holding agencies, ensuring financial accuracy and a streamlined workflow. 

If you need help with your month-end processes, are thinking about changing to an agency ERP system, or want to change the way in which you recognize revenue, get in touch. 

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Helen Johnson 
+61 404 458 797


Christian Arpe-Hansen
+45 31 36 66 03