Over the past few years, there has been significant growth in the number of new agencies in Australia providing digital marketing services. Apart from large global agency networks like WPP, Publicis Group, Interpublic, Dentsu Inc, and Omnicom Group, the digital marketing industry is highly fragmented. There is a high demand for services provided by digital marketing agencies. If you own an agency, you know how difficult it is to pull off the client’s expectations while also continuously working towards acquiring more and more clients. While you are busy with these tasks, the chances are that you might end up overlooking other functions of your business.
While we are not an expert about other functions, we can certainly guide you on what we do best in accounting and bookkeeping for your business. Here we have compiled five advice in regards to accounting for digital marketing agencies that you should keep in mind to avoid chaos in your financial function –
- Accounts Receivable and Payable Automation:
Cash inflow and outflow is a natural process in business, but there should be a balance of both for the business to sustain. While delayed accounts receivable obstruct your cash inflow and creates issues in terms of operating cash requirements, a delayed accounts payable also does no good to the organisation as it reduces credibility and increases debts.
In digital marketing agencies, organisations generally end up with long due debts due to either agency’s negligence, lack of resources for accounts receivable task, or the client’s irresponsibility. These disrupt the cash flow for the organisation, and hence it is in agencies best interest to automate the accounts receivable and payable process.
- Payroll Management
Marketing agencies sometimes rely on freelancers, interns, and contractors in addition to in-house full-time and part-time employees. One should understand that the calculation of payroll or remuneration is quite different for each type of worker, and there are specific provisions in regards to offshore contractors as well. Calculating the wrong amount of compensation or error in payslip and invoices might cause dissatisfaction amongst the employees, and this is not an ideal situation as digital marketing agencies are service-based businesses highly dependent on its workforce.
As a digital marketing agency, it is crucial for you to understand the pros and cons of each type of worker and its financial implication on the business while also making sure you do not void any payroll compliance.
- Tax Credits
Digital marketing agencies utilise different software and third-party tools, the cost of which is mostly incurred by the agency, and in a few cases, it is incurred by the clients. Additionally, there are costs involved in advertising platforms like Facebook, Linked In, Google, Amazon, and many more. These platforms are common places for ads, and most clients avail of these services. Now, the issue here is when it comes to billing individual clients for ad campaigns they run.
One must make separate ad accounts on each platform for each client from day one. It makes it easier for you to bill your clients and give an account of the cost incurred while clients require it for tax calculation.
- Payment Gateway
Australian digital marketing agencies usually deals with national as well as international clientele. While it is advantageous to have a global presence, it comes with its challenges. Clients in a different country will be paying in their nation’s currency or your nation’s currency; this creates confusion on either end. You might want to sign up with a payment gateway that is more popular in your target market for your customers’ convenience. There are payment gateways like PayPal, RazorPay, Stripe, Braintree, eWay, Pin Payments, and other gateways that have multi-currency support.
Now, that solves the issue, right? Not exactly! Visualise the situation where you have to record these transactions from the bank statement, and it is a laborious process. And to help reduce this workload, we suggest that you use accounting automation software that has the functionality of integration with all of the above payment gateways and automating recording and reconciling the transaction. To name a few MYOB, Xero, FreshBooks, QuickBooks Online that supports multiple currencies with an automated invoice and bank feed.
- Keeping up to date
We know that accounting is not your forte. However, suppose you are a small agency with limited resources and do not want to opt for outsourcing your accounting process. In that case, you must make sure to keep yourself updated related to tax administration, accounting, and bookkeeping for digital marketing agencies.
There are regular changes in the laws, legislation, budget, and tax in the Australian economy. And while keeping updated with it helps to avoid any penalty, it also helps in taking full advantage of any announcement that might impact your business. Now that we are talking about it, the recent Job Maker plan is helping businesses in creating more jobs by providing benefits like lower taxes, JobMaker Hiring Credit, and so on. If you were planning for an expansion, this is the right time.