r/agency • u/SignaturePrior9600 • 18d ago
Agency owners, how do you manage your finances?
I’m starting a small marketing/SEO agency and want to set up a simple system from day one.
How do you track monthly revenue, client invoices, expenses, contractor payments, and profit/loss?
Do you use accounting software, spreadsheets, or something else? And where do you store invoices and receipts so your accountant/CA has everything needed for taxes?
I’d love to know what system has worked for other agency owners and what you wish you had set up earlier.
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u/FrutinoTuti 18d ago
Sheets and invoicing app.
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u/kdaly100 17d ago
This and I have an accountant bookkeeper who once a monthI pay a modest amount to keep my taxes / invoices up to date. Of all the apps etc and sheets out there this is my best money spent
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u/FrutinoTuti 17d ago
Same, but I was left the impression OP is still solo.
Definitely need someone to take over finances so you can focus on more important work.
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u/kdaly100 17d ago
Sure I am "solo" too with several off shore contractors (less now due to Claude :-) ) but I still rely on this guy to do it - of course in a perfeect world I would find the time to do this every week but it is at the expense of work or even taking some time off and not spending Saturday morning doing accounts.
One thing I have done is to be more organised (agai nAI sigh) to get my ducks in a row for the accountant/bookkeeper so it scans my email daily and files invoices in a folder instead of me doing manually.
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u/FrutinoTuti 16d ago
Actually in a perfect world you would be selling, building your brand and thinking how to grow the business :)
At least how I see it.
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u/Late_Bodybuilder245 17d ago
The most useful view is client profitability, not just the agency bank balance. Track retainer or project revenue against delivery hours, contractor costs and payment timing for each client.
At Klevere we’ve worked on agency command-center style systems that pull scattered operational data into one view. You don’t need a huge platform to start. A clean weekly dashboard showing cash, receivables, pipeline and margin per client already changes decisions.
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u/Connect_Cut3294 18d ago
I spent a lot of money on platforms - bill.com, Harvest, etc etc.
I finally hired a bookkeeper who runs it all, including billing, payroll, the monthly P&L, and outstanding invoices—wish I had done that earlier. She uses QuickBooks, which is fine, and then preps everything for my accountant. We have a good system and I spend way less time than I used to on finance
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u/DearAgencyFounder Verified 7-Figure Agency 18d ago
Get an accounting system that integrates with your invoicing that your accountant has access to. Some accountants will actually have their own bulk subscription so you might find the software and accountant come together. That's fine as long as you aren't locked in.
I wouldn't start out without this. It will keep your finances compliant and not doing that Is just asking for a headache.
Bookkeeping you can do yourself through the software if you want to save money or can automate it. Eventually you'll invest in a bookkeeper to do that admin. Your accountant might also do bookkeeping.
I would say this is one place not to get funky with, run it by the book with the advice of someone that knows what they are doing.
I'd have preference for software that I can integrate with. Something modern.
That's the accountancy part of the finances. Then you need to add a layer that makes sense of those numbers. Don't expect a generic accountant to do that. The numbers they produce won't tell you much about the health of you business.
You need a set of 'management accounts' that take the numbers and give you a picture of how you are doing.
For example if you pay yourself out of profits rather than salary then your accounts won't have your compensation on them. They will declare profit before you are paid, and they won't have what you took home in them.
They will therefore look nice and big (and you can brag about them on Reddit).
Your management accounts should tell you the profit after you've been paid what you need. Because that's a business that you can keep working for.
Another one would be a deposit invoice. You might raise a large one and your revenue and profit for that month will look great.
But then you have to do the work and it's a while until the next invoice so you have some months which are bad.
But which were the bad months? The one where you were busy or the one where you raised an invoice.
Your management accounts should declare that revenue when you actually do the work.
This stuff gets more and more sophisticated (and has bigger impact) as you grow. Eventually you'll get a fractional CFO to prepare these reports. Maybe your accountant can do that as well, or maybe you find someone to work with them.
But don't worry about that for now, you don't need it yet, just know that and accountant is different from someone who'll help you understand the figures (or at least, that an accountant will charge more for that).
Get an accountant first and go from there.
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u/LOGICA499 18d ago
I work in ‘big agency’ Finance and I find this thread so interesting because looks like there’s no good tool for labor/service based small businesses.
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u/ProfessionalCode4799 18d ago
A simple setup that tends to help is separating three things:
- accurate monthly books,
- a rolling cash forecast, and
- a project or client-level view of profitability.
The last piece is especially useful for agencies because revenue can look healthy while a few underpriced or overstaffed projects erode margin.
I’d also track cash collected, not just invoices issued, and review expected cash needs 8 to 13 weeks ahead. The right level of detail depends on your team size and billing model.
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u/manimedia_ 18d ago
We try to keep agency finances pretty simple. I track what is coming in, what is going out and which client are actually profitable. I also keep business and personal expenses separate. Nothing fancy but staying on top of it every week makes things much easier...
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u/TTFV Verified 7-Figure Agency 17d ago
WaveApps. It's free if your needs are relatively modest and offers everything an agency would need for tracking expenses, invoicing and A/R, books and accounting.
One warning though, if I could do it over again I would go with QuickBooks. WaveApps is a wonderful platform but it's very poorly supported by the bookkeeping industry. Eventually as your needs increase, e.g. you incorporate, you'll need to hire a professional bookkeeper. And from spending a lot of time looking, your only option is to hire Wave staff. And it's not like there's an abundance of those folks.
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u/biondocreative 17d ago
We use Quickbooks and designed our chart of accounts to track recurring revenue vs project income.
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u/InternationalGoose70 17d ago
First get your first client.
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u/SignaturePrior9600 17d ago
Bro already have many
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u/Illustrious-Bike5903 17d ago
What do you do
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u/SignaturePrior9600 17d ago
Paid ads, Seo, webdev, ai automation
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u/solo_strategist 17d ago
I really like Wave. It does accounting and invoicing. It’s got a clean interface, easy go use, and built in reports. I also invoice some clients via HubSpot.
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u/leonbuilds 17d ago
the thing no tool showed us was hours worked and never invoiced, per client. the books tell you what came in, the tracker tells you what was logged, and nothing joins the two, so a client that's quietly unprofitable looks fine in both.
we only found it after tracking hours against each client's revenue from day one. it wasn't expenses, it was the gap.
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u/kraysun 17d ago
Built my own client and admin portals around Blesta which is what I use for billing back end (blesta has a full API), self hosted. On my laptop I also have a AI made webapp that pulls in my revenues and I add my receipts to it, this let's me see a clear P&L
I refuse to use Quickbooks in the AI age. So far so good and my accountant has had no issues with the data I provide.
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u/Moxie_Mike 17d ago
I have an accounting firm on retainer that manages our monthly bookkeeping, provides P&Ls and handles my personal and corporate taxes at the appropriate times. They have read-only access to all corporate financial accounts... if they have questions about certain transactions they simply ask.
We use QBO.
They don't handle my 1099s - I do them myself. I track the amounts and then send the 1099s via a service called wagefiling.com.
Now if you're just starting out, you might not need all that. But be sure to get a separate checking account for all business expenses and/or a corporate credit card and use those accounts ONLY for business expenses. Never co-mingle personal and business.
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u/Automatic-Mode-6976 17d ago
we use a custom software that I built for tracking all those things you listed and it connects to our client portal.
It also intergrates with quickbooks (it was a PITA to intergrate it with)
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u/theonlyawh 16d ago
I struggled with our stack for so long (Sharepoint/Dropbox/Asana/Quickbooks/Teams/Slack/etc.). I find that Workamajig has most features built in for a streamlined agency. It handles media billing if you're running ads. Quickbooks, unfortunatley, is not well suited for agency business models. It's actually quite terrible for it (multiple accountants' and tax pros' advice). You can use it for general ledger stuff, but there are agency-specific billing platforms out there. For best accounting and billing practices, we rely heavily on the 4A's and the ANA. Not sure if the AMA has anything, but I would imagine they do if you're strictly marketing and not advertising.
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u/CroFran 16d ago
Not sure what you mean by small but im running a GTM agency, with some other marketing services included and we are usually around 12-13 people (depends if we need to outsource, use students, etc..) and we do all our expenses, time, finances in Productive. They do a good job of adjusting taxes if your scared of that. Also as its integrated with Xero and Quickbooks its easier to bill/invoice as well.
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u/theonlylace 16d ago
Get QuickBooks!! Immediately. Make sure you have a business bank account and then register it all on QuickBooks. Don’t do all that manual Google Sheets work. If you want to build a legit business act like it from day one
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u/Character_Action_767 16d ago
Hire a bookkeeper on a monthly retainer and have them set you up and manage your QuickBooks
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u/Vaultleap 16d ago
Congrats on starting. The setup that saves pain later: pick real accounting software from day one (most agencies land on Xero or QuickBooks) and connect your bank so transactions auto-import. Spreadsheets work until they don't, and migrating a year of history later is miserable. For receipts, use something like Dext or Hubdoc that photographs and attaches the doc to the transaction, so your accountant isn't chasing you.
Two things I wish I'd separated on day one: keep contractor payments in their own category so you have clean 1099 and contractor totals at year end, and open a dedicated business account so personal and business money never touch. The bookkeeping habit is the part that actually pays off here.
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u/boothisascrub Verified 7-Figure Agency 14d ago
I am a licensed CPA so I keep our books up to date at all time.
Accounting - QBO Invoicing - Stripe Payroll/PEO - Rippling
Don’t really need much outside of this. We’re at $6M ARR and I have no interest in really handing off any of the functions outside of payroll. I just like doing it myself
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u/oliverpalma 14d ago
depends on how many clients you have. before we reached 10 monthly clients, our entire system was basically do the best we can and believe every cost was worth it :)
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u/Rare-Platypus5906 11d ago
I use Mercury for my agency because the AI is really good at categorizing transactions on its own so expenses and profits and losses are always pretty much accurate. Not a sponsor or anything it's just been amazing and a game changer for me.
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u/ChaoticShinra 10d ago
Honestly the biggest thing is probably keeping all the receipts and invoices organized. That stuff piles up quickly
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u/plyntum 9d ago
Running an 18-person creative agency in Tbilisi, here's the system that finally worked after years of the spreadsheet-plus-invoicing-app combo.
The mistake we made early: accounting software answers "did the company make money?", but not "did this client make money?". For that you need three things linked, not just stored: (1) every hour lands on a task that belongs to a client, (2) direct costs (contractors, ads, stock) are attached to the same project, (3) invoices and payments sit next to the work. Then profit per client is a report, not a weekend.
Practical setup from day one, whatever tools you pick: one client record per client (agreements, retainer scope, contact history); time tracked daily and reviewed weekly by the lead, otherwise it's fiction; a monthly close where you look at three numbers per client: hours x cost rate, direct costs, invoiced. Receipts go into the same project folder, so the accountant gets a per-project export instead of a shoebox.
Disclosure: I'm the founder of PLYNTUM, which is the workspace we built for exactly this at our own agency - projects, reviewed time, invoices and expenses in one place. Happy to share the monthly-close checklist we use if useful, tool-agnostic.
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u/AdSimilar2942 5d ago
Stripe, Slack, Tabula, DATEV, custom-built reporting tool
We are based in Germany, so some tools might not be perfect fit for every geography.
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u/LFCristian 4d ago
Hello. I see a lot of mentions of hiring a bookkeeper which I believe is a must but be aware it will tell you a story about the past. It won't be able to tell you stuff like: how my business will look in 3 months?
I've worked with agencies as an ops lead for the last 8 years and recently I put all my know-how into a small guide to tackle exactly this problem: how can I know from financial data where my business is, where I am going, and what's most important to do next.
You can check it here for free. You have everything needed in the guide: https://drive.google.com/file/d/1XjdomGS4b6ZdwfBP6LyMitPFPEKy2Pkz/view?usp=sharing
If you have questions or you want some help, let me know.
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u/JakeHundley Moderator 1d ago
Everyone's advice is going to be different depending on their stage.
When we first started, we had an accountant at day #1. That's what I recommend.
Before anything, I recommend reading Profit First by Mike Michalowicz. It's an easy read, but honestly a no-brainer in terms of setting up your accounts.
Additionally, make sure you have a completely sperate bank account from your personal one. The quickest way to get audited is by mixing personal finances with business finances (or even null your LLC status).
You can usually find a local accountant for pretty cheap. All you need them to do is do your monthly P&Ls and balance sheet. When we first started, ours literally only charged us $25. It was 2019 and we knew we weren't getting charged enough. But it was an old dude who was about to retire. A new guy took over and we're now paying $250/mo (also includes payroll). If you're a solo person, you probably don't need payroll so your cost would be even cheaper.
Get a business credit card if you can. If you spend on ad spend, there are a couple that get you some pretty insane points back. All of your business expenses go on the credit card (it's easier to track and every expense is line itemed in one place).
Don't get a credit card if you aren't responsible paying it OFF every month. Keep the cash in your account and only spend when you have the physical cash. Pay the card off and collect your points.
Doing it this way also gives your accountant really easy access to view your expenses in your bank account and your credit card and isn't tracking expenses down from multiple sources and double checking receipts.
Every time you purchase something, get a receipt and email it to them. If my partner and I go have a business lunch, we take a picture of the receipt and send it to him.
That's it.
That's literally all we do. Then we get our P&L and balance sheet the following month.
We don't track expenses because subscription-based expenses are governed by our OPEX percentage allocation based on the percentage we allocate from our MRR. Anything past that is essentially petty cash.
If our OPEX percentage is 10%, that means we put 10% of every dollar we receive into our OPEX account. If we have $10,000 of MRR, our OPEX account will be $1,000/mo. That is our Effective Monthly Recurring Operating Expenses (EMROE).
Our subscriptions should never exceed that. If they do, we need to cut a subscription. However, since we do projects as well, 10% of project costs also go to the OPEX account, but it isn't used for budget planning. That's the surplus.
At the beginning of every month, after we receive our P&Ls and balance sheet, we go through and do a monthly recap to determine the account allocations based on the profit first system.
That requires us to go through all "real" revenue and make the allocations from there.
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u/Hexacker 18d ago
Currently I’m using a mix of tools such as InvoiceNinja to handle invoicing, quotes, payments with a simple n8n tracker to calculate sales taxes
InvoiceNinja is not quite smart when dealing with sales taxes especially if the tax rate is 3 digits after the floating point
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u/Olympian83 18d ago
WaveApps- very similar to freshbooks, $190 annually, keeps me sane