The Top Global Trends In Creative Agencies And What They Mean For Finance Teams: Part 2
How agencies stay on budget – and where they’re going wrong
The latest creative industry report, Facing the Future: A Global Snapshot of Agency Trends, reveals to us that agencies were often using a combination of different tactics to ensure projects stay on budget – not all of them scientific. The most popular method (used by 55% of respondents) was to monitor hours and costs as the project progressed, so that plans could be adjusted before budgets were impacted. A similar number (53%) were using past data to build estimates. However, a substantial 44% of respondents were, rather more subjectively, relying on “previous experience” to set project budgets – and 16% admitted they “hope and pray” projects stay on track!
Interestingly, less than half (45%) of respondents reported charging clients extra for making changes that required additional hours or costs. This may, of course, simply be a business decision to retain client goodwill. However, it raises the question of whether agencies are missing opportunities to charge extra for work because they don’t have effective systems in place to monitor when projects veer off course – or supporting data to justify the extra costs to clients.
While agencies were quick to blame clients for project delays, creative complications and spiralling costs, 43% confessed they had underestimated the amount of work involved in a project when setting the budget. This chimes with earlier research by Campaign and Deltek, which found that two-thirds (69%) of agencies admit to relying too heavily on guesstimates rather than accurate information to do business.
Facing The Future: A Global Snapshot Of Agency Trends
Industry report based on a survey of 600 agency professionals.
Processing is still a problem for agency Finance teams
As mentioned in the previous blog, “Following up on open invoices and purchase orders”, “Chasing late timesheets and expenses” and “Reconciliation of data from different sources” were the top three challenges for agency Finance teams. And, tellingly, the most popular technology tool at agencies (by far!) was Microsoft Excel, which over half (54%) of agency professionals reported using. This perhaps suggests that many agencies are continuing to process and track information manually, whether they’re importing, exporting or consolidating data sources. This all suggests there could be big gains to be made by streamlining and automating finance systems to make routine processes as hassle-free as possible.
Indeed, many agencies reported that they were already using some form of finance management software, with some success. Two-fifths of survey respondents (40%) were either satisfied with, or loved, their current finance and accounting system. However, more than one in 10 (17%) said they were dissatisfied or very dissatisfied with the existing system.
For the full results and more insights, download the global agency trends report from Campaign and Deltek.
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