Aggregating data without spending 8 hours. Not omitting accrued expenses in the calculation of revenue and the overall margin of a project, all in real-time. The task is complex but not impossible if the right practices are applied.
"A figure only lives because it is shared and enriched by all actors in the chain."
In an agency, and for all service companies, this truth rings like a mantra, and resonates twice as much when it comes to implementing effective practices to maximize profitability by projects. When we know that only 36% of organizations are likely to deliver projects within the initial budget, this statement by Matthieu Didailler makes perfect sense.
The observation is simple. The larger the structures grow, the more financial managers are overwhelmed by the flood of daily, repetitive tasks, unable to take the necessary step back to manage all the strategic aspects related to the profitability of their organization. Is the time spent per project measured and adjusted according to the internal skills attached to these projects? Are my business units profitable? What about my individual occupancy rates?
Beyond the observation, practice. To take action and apply the right practices, those that will allow you to project your profitability by projects at any time in just a few clicks, let’s go back to basics. Follow now the 3 simple steps that have proven themselves in the largest French-speaking agencies.
The urgent issue: on which projects are you currently losing money?
To have a clear view of a project and move forward confidently, you must have access to 2 key metrics:
- Project progress: where the teams stand at the current moment in production compared to what was sold
- Actual time spent on the project: the workload spent by team, skill, or business unit
For a financial manager, the exercise is difficult. Still too little used, underutilized, or scattered, the tools used by each team internally rarely prove to be sufficiently efficient financial tools on these subjects. Aggregating data then becomes a tightrope exercise, risking imprecision with each additional step, on the thin wire constituted by the information shared individually and sporadically by each person. Yet, if you want to facilitate financial tracking and have easy access to the right metrics, it is inevitably a step to take.
If you are lucky enough to have a common tool across your entire value chain, efficient from finance to project management through sales, make sure you can track your projects in progress, that client billing is done at the right time (and ideally automated at each deadline!), and that resource planning per project is anticipated at least 3 months in advance to, if necessary, reallocate your workforce and easily check the impact of these changes on the project’s budget and margins.
Surgical action: increase your ability to anticipate budget overruns
Once your assessment is established, you now have the ability to understand in real-time the direction a project is taking, each of your projects, and the overall profitability of the company (85% of an agency’s profitability comes from its projects – and thus from the good balance of time spent/sold on them).
You have a clear view to share with your clients the concrete actions taken to successfully complete their project, the time spent, and the overruns. It is often inevitable that projects exceed the initial estimated budget, and that’s OK. Only you must know on which aspects these overruns occur and adjust accordingly, if not for the current project, then apply the learnings to future ones.
Understanding profitability from the quote stage is crucial. Managing the time spent during the project, but also in pre-sales, is equally important. To avoid cutting too deeply and making overly radical choices – if there is still time – manage regularly, on a weekly basis, and based on the metrics we have developed previously alongside your clients.
Finding the right co-pilot for your structure is not easy. The days of good old Excel for project tracking are over and no longer effective when you have more than fifteen employees.
Only 5% of agencies rely heavily on spreadsheets today, with a large majority – 52% – using disparate tools that only partially integrate with others. Agencies that have fully grasped the stakes of real-time data analysis make up only 14% of the total proportion of agencies in France.
Heal without scars and become Furious to develop your profitability
It is with the desire to avoid consolidation errors and multiple integrations on different tools, rarely or not at all used by different teams, that we designed Furious. Benefiting from an aggregated view in a few clicks and in real-time of all the metrics of your structure’s value chain is no longer a luxury, it is a reality with our software:
- Time tracking: evaluate the time spent per project at any given moment versus the time sold on the quote – by skill, business unit, or type of mission – all according to your pricing grids.
- Billing and purchase orders: centralized, sending can be automated, tracking purchases is simple, all of course linked to projects.
- Financial (or non-financial) report templates adapted to the issues of service companies: more than 200 pre-configured and customizable widgets are available (breakdown of purchases by project, revenue billed over the period, gross margin billed over the period, etc.).
Would you like to learn more about Furious? Contact our experts for a free trial HERE.
