How to get more involved in your agency finances in 2025 with Sandy Catour

Hey, everybody. Drew here. You know, we are always looking for more ways to be helpful and meet you wherever you’re at to help you grow your agency. It’s one of the reasons why we’ve produced this podcast for so long, and I’m super grateful that you listen as often as you do. However, there are some topics that are better suited for quick, hyper-focused answers in under 10 minutes. That’s where our YouTube channel really comes in. For quick doses of inspiration, best practices, tips and tricks, head over to youtube.com/the at sign Agency Management institute. Again, that’s youtube.com/the at sign or symbol.

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Running an agency can be a lonely proposition, but it doesn’t have to be. We can learn how to be better faster if we learn together. Welcome to Agency Management Institute’s, Build a Better Agency Podcast presented by White Label IQ. Tune in every week for insights on how small to mid-size agencies are surviving and thriving in today’s market with 25 plus years of experience as both an agency owner and agency consultant. Please welcome your host, Drew McLellan.

Hey everybody. Drew McLellan here with another episode of Build a Better Agency, and what a great way to kick off the year, but to talk about money. So, couple things before I tell you a little bit about our guest. Number one, I wanna remind you if that you have not built a dashboard with KPIs, financial KPIs for 2025, now is the time. Get it done. Get it done before Martin Luther King Day here in the States. Get it done before mid-January. Know what the KPIs are that you’re going to measure yourself against. And also the KPIs that are the boundaries. The $175,000 of a GI per FTE, the utilization and billability things you want.

So it’s not just about money, but it’s also about the other numbers, KPIs that matter. Build that out and launch into the new year with that. So you know very clearly where you’re headed, how you’re gonna measure and what you’re gonna do if you’re not hitting the numbers that you want. All right, so with that said, we have had, for the last six months or so, we just started it a, a peer group, a virtual peer group for what we call money people. So it’s bookkeepers, accountants, CFOs, internal to your organization who are often in an agency, the only numbers or math person in the agency. Maybe, maybe if you’re a larger agency, you might have a couple bookkeepers or something like that.

But for many of you, they’re sort of an island of their own. And so we had a lot of requests to create a peer group where people who deal with agency money, again, bookkeepers, accountants, CFOs, controllers, could come together, learn from each other, and the facilitator, and then go back and take best practices back to their agency. So Danielle and I have known agency owner who is also an accountant by background and served as CFO for her agency for many years named Sandy Couture. And Sandy was an owner in an agency that sold in 2022, I think maybe early, early 23.

And so Sandy has always been one of the smartest savviest agency owners when it comes to money that I’ve ever met. So in her peer group, for example, she was always the one who was sort of reminding people what to do with certain reports or financial documents or things like that. She’s just a great teacher and really knows her stuff. And so we were getting a lot of requests to put together this peer group for agency money people. And so when we were talking about who we wanted to facilitate that peer group, it was a no-brainer. We knew that we wanted Sandy to do it because she’s a great teacher. She’s been an agency owner for 20 some years.

So she understands both the accounting and the CFO role and what that looks like inside an agency. But she also understands what an agency owner needs and wants. And she’s been around a lot of agency owners who do not have an accounting background and understands How to communicate financial information and number information to them so that the money person inside your shop and the owner inside your shop, in most cases, you can have a really good relationship support dialogue and you get everything that you need. So that’s going great. The peer groups are going, well. We have two groups. One for agencies under 25 people, one for agencies, over 25 people.

’cause as you might imagine, some of the reporting and other things they have to do are different. But it occurred to me that Sandy is the perfect person to have on the podcast to talk about the relationship between the agency owner and their internal money person or people. And so that’s what this episode is all about. What can you expect? What should you expect from whoever is helping you manage the money and the billings and all the financial stuff inside your agency? What can you expect from them? What do they need from you? How can they help you run your business better? Those are the things we’re gonna talk about. So without further ado, let’s welcome Sandy to the show. Sandy, welcome to the podcast.

Thanks for joining us.

Happy to be here.

So you have been in the agency world. When did you start your first agency job?

Will agency work was how, okay, I’ll date myself back in 2003. Okay. But before that, I had been part of internal marketing teams for a larger, you know, publicly traded companies. So I’ve been in that marketing space for quite a while.

And your background is, you are an accountant, right? I mean, you, you I

Am an accountant by trade. Yes.

You did not go to school for marketing. You went to school for math.

Exactly, yeah. What I’ve learned about marketing has been through osmosis and listening in on conversations. And I probably know enough to be dangerous, but yeah, I wouldn’t say I’m a, I’m a barker.

Like, like I said in the introduction. So you, for many, many years were part of an ownership group that owned an agency out of Arizona. In, in the last couple years, you guys had an exit strategy and sold that agency. But for almost 20 years you were the CFO and owner of an agency that, I’m trying to remember. I think at your height you were probably, what, about a hundred people? 75 people? Is that about right?

The highest was 1 25.

Okay. So, so in the course of your 20 plus years of agency ownership as a CFO, you went from small at two very large, and then again to the point where you guys exited. So you were also in one of our peer groups. So you also got to observe how other agency owners who perhaps didn’t go to school for the math, that sort of thought about their agency finances, reporting, whether or not they used KPIs or dashboards to sort of make good decisions. So talk a little bit about your perspective when you think about what an agency owner who is not a math person like you are, how an agency owner should approach their agency financials.

Keep it simple. Yeah, that’s, that’s what I would say as, as all this a, all this owners have grown in their into marketing. Our marketing has changed a lot since you all started. You take time to learn the new stuff. You need to take time to learn a little bit about this. No, you don’t have to know how to do journal entries. No. You don’t have to know how to, you know, close your books. Whatever. You do need to learn how to read very specific areas of your financials. Yeah. They’re just giving you a story. You know what your business is like. You know what’s happening in the business.

The numbers should reflect that story. And why don’t they reflect that story? So don’t be afraid of them. That’s what I would say. I was lucky that one of our partners was a former CPA. So we measured a lot. So I didn’t have to teach a whole lot. But those that came into our business at that middle management level, they went to school for marketing. They didn’t, or communications, whatever. They didn’t go to school for accounting finance. I took the time to teach them the high levels.

Right?

What does that mean? Take a look at your revenue numbers. Do the revenue numbers make sense to all the work that you’re doing? If they don’t ask the questions, right, how do you ask the questions? You need to have your accounting person, whether you’re a bookkeeper, hopefully it’ll be a full-time person. A part-time person has a little bit more of a difficult time to know exactly what’s going on in your business. But ask the questions, why is the revenue this number when we’re putting in this many hours, when we’re delivering this much?

Well, when I have this many employees, when I

Or have this many employees, right? Why are my outsourced vendor expenses so high? My cost of sales? Why is this so high? Right? We hired employees, we’re still outsourcing what’s happening there. So look at the high level. You don’t need to get into the detail to read the story. Yeah. Same thing with operating expenses. Same thing with payroll. What’s going on with payroll? Why is it so high? Learn that at the beginning of a year your payroll numbers are gonna be high because your taxes are higher. Right. Those go away by the middle of the, you know, the quarter, the first quarter. Just knowing the high level stuff and learning, not be afraid to actually open and the financial reports.

Right. Right. That’s a big start. So look at it at a high level. The other thing that would be extremely helpful in looking at your financials is planning and comparing to your plan. And that’s one of the areas, like when we were in the peer group and some of the agencies that I’m working with now, that’s their biggest thing is how do you know you are where you’re supposed to be if you don’t plan where you’re supposed to be?

Right. Right. Yeah. If you don’t know where the car is pointed, how do you know if you got there? Right.

If you got there. Yeah. What is your destination? Do you need to take a stop? You know, do we need to refuel? Do we need to check the tires? Do we, that’s basically what your financials are telling you, right? Is where are you in your journey to get to that goal, let’s say for just one year.

Yeah.

Are you, are you getting there? So try to make it a story. You guys are so creative. Use the numbers to create that story that makes sense to you based on the type of work that you are doing. Don’t be afraid of it. And let me tell you, if nobody’s expecting you to do this, if you ask a bookkeeper or an accountant, what is this number? Can you explain it to me? They’re not gonna expect you to know their world.

Right. Right.

Right. And so it’s, it’s easy. You just have to make time for it as well. A lot of people, a lot of owners don’t make time for it. They don’t wanna plan,

I think makes ’em nervous or they’re scared of it, or they’re embarrassed, they don’t understand it. Which is sort of why like the a MI report card and the 55 25 20, and you know, we have a handful of benchmarks. To your point earlier, keeping it super simple, you know, I always say to people, start with the 55, 25 20. If your numbers are out of whack there, you at least know what to look at to figure out what’s not. Right. Right. If you’re, because

You have that benchmark, right?

If you’re making 20% profit and all the other numbers are lined up, then don’t worry about it. You’re good. Right? Yeah. Yeah. And then again, the, the a MI report card breaks that down a little bit more, but also still keeps it very high level. So an owner can add a glance, know if their agency is healthy or not, and if they’re not healthy, where to look to figure out where, why they’re not healthy there.

Right. Start and know where, what specific questions to be asking. Right. Because are you asking on the payroll side or asking So vendors, you know, if you’re looking at payroll, my payroll is high. Why are we continuing to bring in more vendors? Yeah. Why,

Why do we have So how

To make that, why,

Why, why do we have all those contractors?

Right. Exactly. Yeah. So that’s, that’s the kind of stuff, it’s like, just keep it high level, but understand it. Read a little bit about it. Yeah. Trust me, we all have to, we didn’t come into this world knowing everything, so we had to study it.

Right.

You can, there’s, there’s different places where you can go and just take a look at it and, and get more involved. It doesn’t have to be your, you know, accounting. Right. 1 0 1 book that you had in college that you had to take. You don’t have to go that deep, but just be comfortable with it. Get to the point where you’re comfortable with the numbers.

Yeah. Well, and as you know, as you know, because you’ve sat in on, on the Money Matters workshop, that’s the whole point of that workshop is like, here’s how you need to think about the numbers. Not just your p and l and your balance sheet, but also pricing strategies and all the things. But, but again, keeping it super simple so that we don’t have to overthink it, but we’re informed about our business.

Yes. And the money matters. It’s a great, great place to go. Keep all the information you have, refer back to it. Right. Right. I still do. Right. There’s times when I still do, I use it to counsel my clients that I have now. It’s like, it’s, it’s written. It’s in such a way that it’s easy to understand, easy to follow. And you shouldn’t go to the meeting and then file the information away. Right. Put

Put, that’s

Not how it works.

Put use. Yeah. Put it

To use. You have to put it to use. Yeah. Keep it in front of you. If you are getting the financial reports and you’re like, Ooh, again, what is this accrued number and the balance sheet, what does it mean? Go back and take a look. Yeah. Do that research. Then you can ask the questions if you want, but keep it in front of you. Don’t file it away. Yeah. And the more that you refer back to it, the more that you, it’s gonna get ingrained in your brain. And now you’re gonna feel very comfortable looking at the numbers.

Yeah. That’s for sure. So you facilitate our CFO group, and we have two groups. We have the agencies kind of under 25 in the agencies over 25. I’m curious, how are the conversations different? What, what do agencies under 25 and their accounting team worry about that’s different than the larger agencies? What, what’s the, what’s the delta between them in terms of what they’re focused on?

Cash management, it’s big. Yeah. Obviously, for obvious reasons. Business development, believe it or not, we talk about it Sure. In in the accounting groups. ’cause it’s important. A lot of owners look to, it’s like, okay, what do we need to, again, what, what is our, what is our number? What’s our revenue number? What’s the business? What’s

Strategy? What’s my go get number? What do I have to go get?

Yeah. Yes. What do I have to go, exactly. What do I have to go get? So we actually talk a lot about that. But cash management is a big one. A lot of conversations around the payroll versus outsourced. What does it make more sense? Does it make sense to bring somebody in or to just outsource? Do I keep it small on the payroll side? But outsource? Most of it depends, you know, again, depends on the type of work that you’re doing. How often, what recurring revenue. We talk about those kinds of reports. What are the ancillary reports that you need to look at? Not just your balance sheet and p and l, which are great and you have to have them and you have to read them.

But what are those ancillary reports,

Margin

Analysis,

The, what are the reports that I as an owner should be looking at besides my p and l and balance sheet.

You need to be looking at your monthly and require this monthly account recs, like credit card account, reconci, reconciliations. This is more fraud prevention. But it’s important. This is something that you can’t just assume it’s getting done. Your bank rec, you need to take a look at that bank rec, you need to see what’s sitting out there. You need to be able to see who are the vendors that you’re paying. Do they make sense? Do those vendors, do you recognize them?

Yeah.

Because that’s a really good part of fraud. It’s, you can create vendors and pay yourself.

I was gonna say, we’ve had several agencies where their CFO or their accountant created vendors and was paying them and the vendor was really their mom. Them or Yeah. Them. Yeah. Yeah.

Exactly. So look at those on your bank account res, look at your credit card account res, there’s a lot going on in credit cards so you can catch. So those are standard. You need to see ’em every single month. Once a month is closed, that that you should just never falter on that. It has to be done for your own safety. Yeah. For your own sake. We wanna trust people. We love our people. We always talk about our, our folks being family, our agency being a big family. However, we know we trust by verify. Right? Yeah.

Yeah, yeah, yeah. So

It’s your money. So those kinds of things. But on the other side of that is start taking a look at your margin analysis by client. So, and not just

How pro, how profitable are we? Yeah.

How profitable is the client.

Right.

Where, look at your hours. Everybody should be tracking hours. Right. We talk about that. And money matters. Look at your hours, but look at your hours by client and by project.

Right.

What type of projects are not profitable for us?

Right? Right. We lose our shirt every time we do a website or whatever. It’s Right. Yeah. Yeah.

So in my experience, back in my agency days, we tracked by service and always, unfortunately, development was a losing proposition.

Yeah. The black hole of profit. Right.

Exactly. Yeah. So there was, you know, media and social media and everything else that were, you know, all the other branding, creative, all that stuff. Yeah. Just brings that up. So we made the decision and we outsourced that.

Yeah. We have a lot of agencies.

Ironically it is web. Yeah. A lot of agencies are web dev because

They’re, it was challenging. Yeah,

Exactly. And there are agencies that do that very well and you can partner with them and outsource. And I know that there’s some a MI agencies for sure that are partners. So, but take a look. If you don’t break down and you don’t require that type of reporting for what’s happening, and by the way, those numbers need to match your p and l.

Right?

Because we can create some really fun margin analysis reports. But if you don’t double check that they’re matching what you are, recognizing what your p and l looks like on the revenue sign up to that date, something’s wrong. There’s a red flag.

Yeah.

So require that teach your account managers about money matters.

Yes, for sure.

That is very important. They actually are making decisions and they should be working with your accounting person to say, this project is, at this stage, we can recognize that this, or give the empowerment to the accounting person to say, we priced this at this, this many hours. We’ve used up this many. That’s how much we’re recognized. We’re at 20%. A lot of people don’t do that. Our agencies don’t do that. So you don’t actually estimate at the how many hours Right. In a project when you price it. Right. How are you gonna measure that if that pricing was right?

Right. For

Sure. It all comes together and your accounting person needs to work with that account manager, ae whoever, whatever title you give it that’s working with the clients that are pricing things, they sure require an estimate of hours. Yeah. For that revenue. Yeah.

Yeah. Whether you share that, whether you share the number of hours with the client or not is irrelevant. No, no. Yeah. It’s an, I’m not saying internal thing. It’s not saying Yeah, absolutely. No, no,

No. Internal. It should be part of your process. Yes. You need to have a pricing worksheet. Right. That’s one of the things that we’ve talked a lot about with the agencies is how do you price? Do you have a tool and Yeah, I know there’s working maji, there’s advantage, all the tools. Right? We all have all kinds of things and we’re working guess where we all end up Excel.

Yeah. Right.

And creating our own Excel. And it’s just because of the flexibility of it. Right. So we don’t have to be Excel gurus and create all kinds of crazy things. It could be simple. Yeah. And so we talk about pricing as well. We talk about the process of when a contract is signed, of when pricing is given to the client. We had, when we were in the agency, one of our processes that no number was final and given to the client until it got reviewed.

Hmm. Interesting.

By accounting, because we needed to make sure that you have the right internal cost. Right. As far as like, Hey, our protected margin is this because our internal cost is this or this service. So okay, why are you giving it away? Right. Was it you, I know I heard it. I think it was money matters where it’s like you price it, you, you estimate the hours and then you multiply it by 30%. Yeah.

It wasn’t, yeah. The, the drew hack 1.3. Yep.

Well, exactly. Yeah. So I’m like, oh yeah, no, yeah. Called, I call that the BS factor, but yeah, so you have to do that.

My, my name has been synonymous with BS for years, so I’m, I’m, I’m okay with that.

So, yeah. So it can be a very simple, so we talk about pricing, but now you’re starting to plan. Yeah. When you do that, you’ve just given the accounting person that to measure and say, we estimate this project at this revenue for this many hours at this margin. Oh, by the way, we have this much in vendor cost. Now we can start projecting the vendor cost.

Right

Now we can start projecting what our expenses are gonna be a month from now, two months from now. You see that now that correlates back to our cash.

Right.

We can correlate when we’re billing the client. The reason why we reviewed contracts and we reviewed pricing worksheets because we always had, you know, they have the best, the client’s best interest at heart, God love them, but they would give them 90 day terms, 120 day terms. Oh, but there,

So no milestone billing. Everything paid at the end. Right, right, right.

Exactly. So we looked at all that. Why? Because all that affects cash.

Right.

You teach your account managers, this is why I need you to tell me. You, you are telling me how this project is gonna go and I manage the financial end of the project based on what you’re telling me. Right? Oh, by the way, this also affects cash. Right. Which is another ancillary report that a lot of owners don’t have use require cash forecasting. Right. We run the agency by the seat of our pants and Yes. The bank account balance.

Yep.

That’s scary to me.

Yeah.

That’s extremely scary. Right? So again, because I’m an accountant and I’m conservative by nature, when it comes to, I’m very risk adverse. I don’t like, you know, taking loans I don’t like, I, I want my business to pay for itself. Right?

Yeah. For sure.

So I gotta manage my cash. Well, all these different ancillary reports all tied back to cash.

Well, and I think for a lot of agencies that it is, it is, at the end of the day, it’s, do I have enough money to pay my bills to pay payroll? A lot of agency owners, that’s, that’s the number. Like what’s my nut? What do I have to have every month to pay everybody?

And that’s what’s keeping everybody awake at night. Right? That’s what ages you. Right? I know. It did for me. Yep. Just, just like any other agency. We had our ops and we had our downs

Of course.

And it’s the, you know, it’s reviewing what’s happened, getting the story, what’s happened. Great. You need to do that. Keep doing that, but translate that into what’s gonna happen in the future. Right.

Help us

Sleep. You can plan accordingly.

Yeah.

What does it look like, right? What, you know, how much money am I gonna get in two months, three months? How much work are we starting right now? How much do am I gonna owe vendors because I had to outsource something. Look at least three months ahead. Right. And that’ll, that’ll help you have time to cut back on some expenses if you need to.

Or write yourself a big old, old dividend check.

Yes.

Yeah,

Yeah, exactly. No big, just because the bank account shows it doesn’t mean that it’s all yours come three months from now, there’s nothing coming in, but you have all this stuff to pay. Right. So forward looking reports are very important.

Yeah, for

Sure. Very important.

I wanna take a quick break and when we come back, I wanna talk a little bit about the role of whatever the title is, bookkeeper, accountant, CFO, inside an agency and how an agency owner should think about that role and sort of as they think about a leadership team or sort of a confidant and all of that. So let’s take a quick break and then we’ll come back and talk about that internal resource and what their role could or should be inside an agency. So we’ll be right back with more with Sandy. Hey everybody, just wanna remind you before we get back to the show, that we have a very engaged Facebook group. It’s a private group just for podcast listeners and agency owners that are in the AAMI community.

And to find it, if you’re not a member, head over to facebook.com/groups/baba podcast. So again, facebook.com/groups/ BAB podcast. All you have to do is answer a few questions to make sure that you are an actual agency owner or leader. And we will let you right in and you can join over 1700 other agency owners and leaders. And I’m telling you, there’s probably 10 or 15 conversations that are started every day that are gonna be of value to you. So come join us. Alright. We are back with what we call our adjunct faculty. So the, those agency owners who help us lead peer groups and teach courses, and Sandy, as you know, because you heard it in the intro, leads our CFO group.

And so two of those, one for agencies under 25, 1 for agencies over 25, they get together for about a half a day every quarter. Because unlike some of our other peer groups that meet every month, they get into a lot of the nitty gritty detail stuff. And they wanted bigger blocks of time to be able to crawl through spreadsheets and do things that accounting people do. So before the break, Sandy, I said, how should we as agency owners think about our, again, bookkeeper, accountant, CFO, whatever that role is, and how they serve us and the agency. Talk a little bit about that person’s role in the agency and their relationship with the owner.

Yes. Very important. They are not just ops and somebody that you hear from once in a while, they need to be your right hand person.

Yeah.

Think about it. This is somebody that you’re trusting with your money, right? With your business, with your baby. This is your babysitter, basically. You gotta trust them. They have to be your right hand person. They have to be the ones that they see the red flags. Before you do that, you need to be able, they need to be able to go to you and feel comfortable going to you and giving you so nuts a good news sometimes, right? Don’t kill the messenger. Talk about it. It’s like, okay, what happened? Let’s look into it. Use them as that at those eyes and ears of your business, right?

Because they are into everything. They will know the revenue that’s coming in, what’s getting billed, what AR looks like. If you’re having issues collecting from a client that’s cash for you, they can take a look and make sure that everybody’s following procedures to prevent any fraud of payments going out that don’t belong to the agency, that don’t make sense. They’re your gatekeepers, right? They are your gatekeepers. And they need to not just be a right hand person and have your trust, but you need to empower them to be out at the table with your leadership team.

They need to be part of your leadership team. Because, and I’ve sat through many of these, oh, love the marketing people. They’re so creative, I love them. But sometimes there’s a butt, they come up a butt. There’s a butt there. Yes. Yeah. They come up with some crazy ideas of this new service, of this new project. And we can do this and we can do that. And this is new revenue stream. Oh my gosh, how great. Oh, time out. Your accountant knows that, okay, we’re gonna have some tax implications. Are we, we ready for that? We don’t do tax now because we do all services now.

We’re gonna have product or oh, oh, you’re selling, you know, subscription or software that you create to help other agencies do A, B, C, right? Oh, that creates, they don’t know. That creates a tax event. Your accountant knows that creates a tax event. And yes, they, for the most part, they’re the gonna be the naysayers. They’re gonna gonna bring all the buts into the story and whatever. But you need those in there, right? You need to know what hurdles you’re gonna have to jump through. And you may make the decision that, hey, we’re gonna jump through ’em because this is makes sense.

But at least that person already knows, oh, I gotta go and take care of this and make sure we’re tracking this correctly. So we file this correctly. It’s okay. Do not drop these kinds of bombs on top of it, you know, on their lap, right? And say, oh, we’re already advertising this. It’s, they have to know that. They have to know what’s coming up. So pricing, when you go into pricing, again, you’re sitting around the, the leadership table and saying, what business development do we have? How are we gonna price this? What are we doing here? They need to be part of that conversation, to be honest with you. And that’s where they, depending on the size of your agency, you may not need to have them there all the time.

A smaller agency, probably not. But it’s always had good heads up, right? Working with a client right now that didn’t have that relationship with their bookkeeper and the books. Nobody knew what the revenue meant. And there were conflicts. And you know, it’s like when the bookkeeper would be asking questions, account managers, they would be that friction and animosity between the two. And that’s the last thing you want. If they’re part of a team, right? Then they’re talking all the time there. And it helps that communication, it helps to have the account managers AEs learn about why the financials need to look like this.

What does that look like? Here’s the report, let’s talk about what happened. How do we change it? So it creates a different dynamic within the team. And it, it really, they bring a lot to the table if you let them and you include them.

So I am a non-math person. I’ve hired a math person. How do we communicate well together? Like what, what are some best practices? How often should we get together? How, like, you know, I, I hear what you’re saying about the leadership level, but should I have a monthly meeting with just my accounting person to go through certain reports? Should, you know, just how do we, how do I work better? How do I tap into this resource that I have?

Yes, absolutely. You need to have those conversations because you’re gonna go in deeper with information on your financials that the rest of the team doesn’t need to be privy to. So at least monthly,

Right?

When you meet monthly, yes. You’re gonna review the history, what happened in the last month in the quarter, however to the year, but also make time to request a forecast. What does that look like? Yeah. What, what projects need to happen? I need you to help me lead that project and say, that project needs to be finished in the next two months. So meet at least on a monthly basis and require your financials to be closed a month end closed and reports done on a monthly basis, no later than the 10th of the month. I don’t care how big or small you are, you can have your financials done by the 10th of the month.

I’m astonished at how often I talk to agency owners and they’re like, like you and I are recording this in November. And they’ll say, yeah, I just saw my August close books. And I’m like, what the heck? And they’ll lay, well, it always takes two months. And I’m like, no. So I’ve always said, by the 15th of the following month, you’re saying the 10th. So yeah.

Okay, 15th.

’cause you’re, you’re really waiting for bank reconciliation and credit card reconciliation for the most part, right? Isn’t that what the delay is?

And a lot of credit cards all close up by the 30th. So you have your statement online. You don’t have to wait for it to be in the mail. You don’t have to wait your, for your bank account to be in the mail. You can log in on the first of the month and see it. I can guarantee you all banks will have statements done, you know, bank statements done, done by the fir by the first of the month. Shouldn’t take that long. Honestly, those kinds of things don’t take very long. Credit card bank account. Not long at all. What could take a little bit is obviously most agencies should be on accrual basis. Yes. Is figuring out people not entering their time on time waiting for people to catch up so that we know what percentage of the work got done.

So we know what percentage of the revenue we need to either accrue or defer. Right. So that usually is what takes the longest. Having people, we used to have our account managers review time and make sure that the time entries were, and the proper jobs. ’cause that happens a lot, as you know. Yeah. Yeah. Oh, I just need to get my time in. I’m gonna put it wherever. Right. Well, no, your account manager should know who’s working on what and whatever. Right. Right. So that usually was it what took the longest time, because they actually had to take time to do that. And we recognized that, but they knew how important it was.

So always asked the owner, I was always pushing on, get your client entry done on time so that this doesn’t slow down your month end so that the account managers have time account managers had deadlines. You gotta do this. If not, I’m gonna say that time belongs to that job. And guess what? You’re being measured on the margin on that job. You just lost a margin on that job. Right. You’re me. You know?

Yeah. You’re, it measurement impacts impacts your performance. Right.

Exactly. Yeah. Exactly. Impacts. So they should be close. There’s nothing there. One of the things that I love to hear some bookkeepers accounts is like, oh, I couldn’t do it. You know, I was busy running payroll. It does not take three days to run a payroll. Right. Nowadays with the way that payroll’s done, it’s, it’s seriously, it’s was back. Even

If you have a bunch of employees, it’s not that hard. Right. And most of us don’t have that many hourly employees. Everybody’s salary, right? Yeah.

And then they have their time entry in and you know how many hours it is and you just, it takes 10 minutes at the most five minutes. Yeah. Right? So look for those excuses, they don’t make sense to you as to tell me why it takes so long to close it out. Right. Like in detail. And you’re gonna get, and they’re gonna start throwing accounting jargon at you. They will do that. Trust me. Accruals, deferrals and the don’t just stop ’em. Right? That’s how you communicate with them and say, I’m sorry, stop. You know, get me nice about it. But say I’m not an accountant.

I need you to explain this a little bit better to me. Ask, communicate. I need you to teach me. I need to understand this. So explain that. And I know I’ve asked you before, can you explain it to me again? I’m sorry, I don’t understand this. Don’t be afraid to tell that to your accountant, because guess what? You can’t put your accounting to do strategy for you. Right. They don’t know that. So you can’t throw ’em in there and say, do it. Right. It’s the same way. You don’t know it. Ask them. Right. But communicate constantly with them. Right. Why does it take so long? What is

It? And have, and have the expectation of the month has to be closed by the 15th of the following month or whatever your date is. Yeah. And, and if we’re gonna violate that, I need to know why. And it has to be the exception to the rule, not the rule.

Exactly. And again, you’re measuring everybody else in the agency to get their job done. Right. You have different measurements. This is one to your bookkeeper. Right. If they are constantly late and they can’t get this done, get to the bottom of it as to why. And it may be that they’re not for you.

Right?

Right. So it’s okay to go find somebody else that will be able to do that for you and meet those deadlines. And Yes. Occasionally, you know, people get sick or whatever, especially if you’re, you know, one in your accounting group. Right. That happens. Right. But we’re the larger, just, you’re gonna have more people

Other, other than a vacation or an illness. Deadlines should be able to be

Hit. That deadlines should be able to be met. Yeah. Yes. And the 15th is very generous.

Okay. So if, if I, if as, as we’re wrapping up, if I’m holding a monthly finance meeting with my money person, whatever that title is, what should I ask? What should that meeting look like? And who presents what to whom?

So that monthly meeting, the accountant, it’s the lead they need to come in with, well, first of all, send the fi the balance sheet, the p and l margin analysis at the very minimum, back reconciliations, all that. Put a nice little package, send it to the owner. You need to get it at least a day before your meeting so you have time to digest it and have a good meeting. You need to take a look at it.

Okay.

Don’t start asking questions the day you get it.

Right. Okay.

I like those start, those are for you to your

Meeting. So there’s, so there’s some prep on both sides. It’s

A prep on both sides. Yeah. Yeah. Absolutely. Again, this is, this is the communication with the accountant needs to go both ways. So they need to get it to you at least a day before you prep. You have the time to go through it, ask your, you know, write, jot down your questions. What are you gonna ask the next day? You go into the meeting, the accountant says, okay, so you’ve gotten this, we’re up to, you know, the month look like this, the quarter’s looking like this. I would ask for protections. What does it look like right now with contracts that we have in hand? What does the rest, what does next quarter look like? What does the rest of the year look like? You know, we’re looking to make numbers.

We’re not, we’re falling short and here this, you know, this is why we need to take a look and solve for this. Okay. And you to come with solutions.

Okay.

As a good accountant. It’s, and that’s why you’re counting on them. It’s that like, Hey, you’re looking at these numbers. Yes. We’re trending in the wrong direction. What would you do if you are in my shoes?

What are my scenarios? What are my, what, what are the three things I should be considering? Yes. You know, it, it’s, do we furlough someone? Do we cut this expense? Do I, and I, I’m gonna underline this, do not recommend this, but do I not take a paycheck? Do I, like what do I do? Right. You want somebody to come with those solutions.

Yes. Yeah. Recommendations as to possible solutions to this. And not the day that the bank has. No, you know, the balance is zero. Right. You need a three months before that. Right.

And I’m forecasting out,

Request that forward looking information. For sure.

So depending on the accounting software, so you mentioned work Maji Advantage. A lot of agencies, as you know, are in QuickBooks of some variation. I will have a lot of agency owners, especially around cash forecasting. I will have a lot of agency owners say their accounting person says, our software doesn’t do that. Is there any reason why an accounting person cannot put together a cash forecast that is at least a couple months out?

No. They should be able to do with it. They’re right. The softwares are very bad at forecasting.

Right. So you kind of almost have to do it manually.

You do, but you don’t have to make it complicated.

Right. And you’re not trying to do it to the

Penny. Right. You’ve got the outs.

Yeah. You’re not trying to do, you’re not trying to make it to the penny. It’s, it’s a ballpark.

Yeah. Yeah. And please do not request anything to the penny out of York County person. Right. ’cause and they’re gonna waste more time. Right. And trying to do something like that. Yes. High level the end’s, the outs. Listen, we have, this is the ba the bank balance, again, this, this report that I’m talking about for cash forecasting, the bottom for November, you know, whatever our November balance was should match what’s in the bank rack. Right? Right. Whatever the bank said, what’s our balance? That’s where we’re starting December with you start December with that balance.

Here’s what we have in accounts receivable that we expect to collect this month because they’re at their 30 January. You’re gonna have an AR that’s sitting at 60, you got AR sitting at 90, you got a problem. What’s going on? Something talk about, but you, you have your AR reports. That’s a total amount. I don’t wanna buy client, I don’t wanna buy service. Right. Total amount. What are we, what am I supposed to collect? What am I, you know? And for the future months, for at least the next two months, it’s what do we have contracted right now that we forecast a bill next month to collect in this second month.

Right.

It should be pretty simple to get to. Yeah. Those are contracts you have. Those are projects you’re already working on. You should know what you’re gonna be billing in the next month and two months.

That’s the, but if you don’t, you have a whole different management issue. Right. If you have no idea what your team’s gonna be doing a month from now, that’s a whole different,

That’s a different problem.

That’s a whole different scary problem. Yeah.

Yes. Yes. And we’ll probably bring in the COO grew on this. Right. Right. But that’s a different problem. But you should be able to get to the ends, should be able to get to the out, you have open pos, do you do pos? Right. Or your vendors, A lot of places don’t. No. Right. And all of a sudden we get the surprise invoice. Right. We don’t forecast our vendor’s expenses. You need to forecast those the same way you forecast revenue. You have to have a PO process. You, you have open pos, you’re gonna pay whenever that’s money out, you don’t know where your payroll’s gonna be. That’s money out.

Right.

If you have loans, you know what you’re gonna have to pay, you know, servicing those loans. It’s simple. Bottom line, this is where we should end up the month.

Right.

Keep, again, keep it simple, but there is a way to do it. Don’t over complicate it.

And again, but they

Should be able to give you that.

There’s no excuse no matter what software you’re in, that someone can’t pull up a Google sheet or an Excel doc and, and basically template that out and do the math.

Oh my gosh. Yeah. Piece of cake. Yeah. Yeah. You should be able to. But it’s easier to do when you are tracking your existing projects. When you are tracking, when are those, when are they due to be billed? Right. Where are we with that? You need to track those somehow. And that’s one of the areas where I don’t see people doing that. Right. Where it’s like you have no good way of tracking your existing work and timing of that work. Yeah. The client moved it out. Well, you need to be able to track that to say, oh, client. ’cause we know the clients never delay any of their stuff.

No, never. Right.

Yeah. You need to be able to say that client put this on hold or client delayed it. Well guess what? That money needs to move out. That affects your cash forecast. Right. So you need to track that. And it makes the cash forecasting easier. Yeah. But it should be,

Well, and again, this is all about if you have the right parts and pieces in place and you’re doing, as we said at the very top of the hour, you’re keeping it super simple. But there are certain things, there are certain data points, you know, you need to have every month, every quarter. When you have those, and it’s, you know, it starts with daily time sheets and it starts with purchase authorizations or project authorizations or contracts. It starts with pos for vendors. It’s, you know, it’s, it’s all these little things that add up to the accountant. Again, whatever you call your accounting person to be the partner. And one of the things I think about from an accounting perspective is this is the, this is your, the person who’s out in front looking ahead and sort of watching the horizon for good or bad news.

But like, what’s the weather coming? Like what’s the weather tomorrow? What’s the weather next week? What’s the weather a month from now? And then is your forecaster saying to you, boy, we’re gonna have a great quarter. Or we’re gonna, we’re gonna hit the numbers, we’re gonna pay out bonus this quarter. Or you know what, we’re great right now, but in a month we are gonna be in a cash poor position, so we need to stock away some money or do a something, whatever it is. And if we don’t empower them to do that, and to your point, if we don’t have a regular agenda driven conversation around certain reports, then now, now I’m operating my agency blind.

Right. And so a lot of these accounting folks that are coming to you, they don’t think in those terms. Right. So you as the leader, as the owner, need to say, this is what I need from you. Right. You’re not gonna tell ’em how to do it, but I need their reports done by the 15th. I need these things sent to me beforehand. I need explanations. I need you to look out for this. I need you to work with the account managers to know where things are at. You need, you are the owner. You need to be the leader. You need to tell them what you need from them and give them the space to do it. Yeah.

And hold them to it.

Right.

But that’s, you know, they can help you. They can really be the lookout person for you. But you gotta tell them that’s what you need from them. ’cause otherwise, guess what? I can sit at my desk and do journal entries and AP and AR and payroll all day long. Yep. It’s getting done. It’s getting done. Right. The numbers are right. And that’s it. I walk away.

Right.

That’s, that’s, you can source,

That’s take full advantage

That you can outsource that. Right. Right. No, you need somebody that can do that obviously, that can do all that stuff, but gives you so much more. Right. And it’s that insight is that looking ahead is those reports. It’s being that lookout person for you.

Well, and if you’re doing it every month, they’re starting to learn what to watch for. You’re learning what to watch for. So you get smarter together about sort of the ebbs and flows of agency life. And you start to, you start to recognize the early warning signs, good or bad of what’s coming. And so, and you start, yeah. Both of you get to be better sort of being able to give a prognosis for how the agency is gonna perform in the next quarter or the rest of the year or whatever that is. But that’s a learned skill together.

It is. And it is together that you are learning because the, the accountant also needs to learn how an agency works. Yeah. They need to learn not having to do the services, but what the services mean. And what do you do here? How does the agency work? Why if I bring you three, four different scenarios for a solution, why is the agency owner picking that one? Right. Because Right. They’ve been done that this is how the agency world works and I can get with the client and do, this may not be what they want, but at least you’re explaining to that accounting person. It’s like, this is why I am making that decision to go this way.

Yeah. To take this risk there’s, or to sacrifice that or whatever. It’s Right.

Yeah, exactly. But so they get it and now they’re learning how you manage. Right. What’s important to you so they know how to talk to you. Right. Same way that you learn to talk to them by, you know, understanding a little bit more on the financial end, talking to them about, you know, approaching them not in a negative way. Right. They are your friends, trust me. Yeah. Yeah. They’re not your enemies. But learning how to have that communication with them so it becomes, it becomes something that you both gain from

Yeah. It’s a partnership.

Right? It’s a partnership. Yeah. Yeah. Exactly. You’re bringing different

Skills. It feels like that to bear, to serve the agency better.

Yeah. And guess what? Most accountants, they’ll put that that monkey on their shoulders too. So they help you carry that burden.

Right, right.

Because they do, trust me, I’ve been in that position where it’s like, I have my sleepless nights. Of course. Right. But you have somebody to partner with to help you. Yeah. And that’s what, that’s what it should be. It should be a partnership.

Absolutely. This has been great, Sandy. Thanks for, thanks for being with us. Thanks for sharing your decades of experience and insight.

I really have to say decades.

Sorry, sorry,

Vast. Yes.

Yes. Okay, we’ll just go with vast. So this wraps up this episode, folks, if you wanna learn more about the CFO group and how your money person, again, bookkeeper, accountants, CFO, can come together. So in many agencies, they’re an island by themselves and they don’t really have other people to talk to about best practices and things like that, which is why we created the peer group. You can go to the A MI website and under the membership tab, you can see the tab for the, what we call the money people group. So again, they meet once a quarter. So they meet in, let’s see, March, June, September and December for half a day on Zoom to learn from each other, to share best practices, to share templates and tools, and to get access to someone like Sandy who has, again, vast experience.

You’re welcome in the field. So check that out. And the other thing I want you to do, the homework I wanna suggest for you is if you don’t have a list of reports that you expect to get from your accounting team, department person, and the date those reports are due, I want you to do that homework. I want you to make a list. And by the way, it should not be a list of 27 things. It should be a handful of things. But here’s the, here are the reports I need. Here’s the data I need them by. And here’s what this report helps me understand. If you sit down with your accounting person and walk through that list, set the expectation of what they should bring you and when and why you need it.

I think that’s a great start to really building, as Sandy and I were talking about this partnership between you and your money person to help you run your business better, to help you put more money to the bottom line, to help you take more money home for your family. These are all very good reasons to make this effort and to talk about something that for many of you, it’s not really your thing. That’s okay. Partner with your person or your people. Learn it together. Learn how to, how to forecast and plan better together and reduce those sleepless nights because you have a better handle on not only what’s happening today, but what’s kind of be coming around the corner.

So please, please, please do that homework and put that into place. Last but not least, I wanna remind you that our friends at White Label IQ are the presenting sponsor of the podcast. So for many years they have been a part of the A MI community. They do white label design, dev and PPC. They support many a MI agencies as Sandy and I were saying, a lot of you struggle to make web dev a profitable thing inside your shop while white label was born out of an agency. So they understand exactly how you do and don’t make money. And they are great at partnering with you to make sure, A, your client gets what they need and want, but B, that there’s a little margin in it left for you even though you’re not doing the work. So head over to White Label IQ dot com slash AAMI to read more about how they work with agencies.

Alright, that’s it. I’ll be back with another guest next week. Hope you’ll be back as well Talk to you then. Thanks for listening.

That’s all for this episode of AAMIs Build a Better Agency Podcast. Be sure to visit agency management institute.com to learn more about our workshops, online courses, and other ways we serve small to mid-size agencies. Don’t forget to subscribe today so you don’t miss an episode.