Financial management in agencies: secure the profitability of your projects

“A figure only lives because it is shared and enriched by all the actors in the chain.” This statement by Matthieu Didailler, CFO of Insign, resonates with particular relevance in the agency world, where financial management is not just about monitoring numbers. It is a complex dance where precision, anticipation, and adaptation are basic reflexes to avoid the trap of imprecision. When we know that only 36% of organizations manage to deliver their projects within the initial budget (Project Management Institute survey), this statement highlights an inevitable reality. As companies grow, financial managers are overwhelmed by a flood of daily and repetitive tasks, losing the necessary perspective to manage the crucial strategic aspects of their organization’s profitability. 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 occupancy rates? Beyond the observation and questions, it is time for everyone to take action by adopting strategic reflexes that allow evaluating the profitability of projects at any time with just a few clicks. Back to basics with the keys to immediate practice for you in three simple steps proven by the largest French-speaking agencies to transform financial management and secure the profitability of their projects easily.

In the competitive world of agencies, quickly identifying deficit projects is crucial.

A project can find itself in a deficit situation for several reasons, such as inaccurate initial budget estimates, inadequate project scope management, or delays in deliverables that result in additional costs.

Identifying warning signs

The first step in addressing this urgency is to establish a system for detecting early signs of budget overruns. This includes monitoring worked hours versus budgeted hours, direct and indirect costs, and the effectiveness of communications within the project team. Modern project management tools offer reporting and alert features that can facilitate this task.

To have a clear understanding of a project and move forward calmly, you must have access to two key metrics:

  • Progress in the project: Where are the teams at the 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, under-exploited, or dispersed, the tools used by each of the internal teams
rarely prove to be sufficiently efficient financial tools on these subjects.

Aggregating the data then becomes a tightrope exercise, missing the mark of precision with each additional step on the thin wire formed by the information shared individually and sporadically.

However, if you want to facilitate financial monitoring and have access to the right metrics easily, it is inevitably a step to take.

Analysis and diagnosis

Once deficit projects are identified, a thorough analysis is needed to understand the underlying causes. This analysis can reveal issues in resource planning, cost estimation errors, or gaps in change management. For each identified project, it is crucial to document the gaps between the planned budget and actual expenses, focusing on areas where budget deviations are most significant.

Action plan

With a clear diagnosis in hand, the next step is to implement an action plan to rectify the situation. This plan may include measures such as reallocating resources, renegotiating deadlines or deliverables with clients, and adjusting estimates for the remaining phases of the project. Communication is also essential at this stage: complete transparency with clients and internal stakeholders is necessary to manage expectations and ensure support for the recovery strategy.

To avoid deficits, a rigorous approach to planning and budget monitoring is essential. This includes establishing robust systems for change and risk management, using budgeting methodologies adapted to the type of project (traditional vs. agile, top-down vs. bottom-up, value-based budgeting), and carefully considering common challenges such as ineffective scope management and inaccurate estimates.

"Having a tool that covers the entire value chain: from the centralization of the beginning (quotation to pre-sales) to the production and delivery of the device allows us to be more coherent and to better control our processes"
Jérôme Balmain
COO and co-founder - La Haute Société

If you’re lucky enough to have a common management tool for your entire value chain, from finance to project management to sales, make sure that you can track the progress of your projects, that your customers are invoiced at the right time (and, ideally, automatically at each deadline!) and that resource planning for each project is at least 3 months ahead, so that you can reallocate resources if necessary, and easily check the impact of these changes on the project budget and margins.

Surgical action: increase your ability to anticipate budget overruns

Anticipating budget overruns requires agile and responsive financial management. This ability to foresee and react to unforeseen events is compared to a surgical intervention in the sense that it requires precision and responsiveness. To do this, adopting an agile budgeting methodology proves crucial. Unlike traditional management, where budgets are often rigid and established annually, an agile approach allows continuous adjustments based on the project’s evolution.

Adopting a proactive vision

It is often inevitable that projects exceed the initially estimated budget, and that’s okay. You just need to know in which areas these overruns occur and adjust the course accordingly

Understanding profitability from the estimate is crucial. Mastering the time spent during the project, as well as in pre-sales, is just as important.

To avoid making too radical choices – if there is still time – steer regularly every week and based on the metrics developed previously alongside your clients.

"The advantage of using multitasking software is the obvious connections between the different tasks. Using such software allows you to have a broad financial scope in mind."
Paul Vedrine Jin Group
Paul Vedrine
Controlling Manager - Jin Agency

Finding the right co-pilot for your organization is no easy task. Gone are the days of the good old excel spreadsheet for project tracking, and it’s no longer effective when you have more than fifteen employees. Because effective budget management starts long before problems arise. 

It relies on accurate estimates, careful planning and, above all, the ability to adapt to change. Agile budgeting, for example, favors incremental resource allocation and supports collaboration within project teams. 

This approach allows budget objectives to be broken down into a number of flexibly manageable processes, providing more opportunities to react to sudden internal or external changes.

Integrating risk management

Risk management plays a predominant role in anticipating budget overruns. A risk analysis conducted upstream and throughout the project helps identify potential failure points and implement strategies to mitigate them. Modern project management tools offer advanced features for risk management, including risk monitoring and evaluation, risk response planning, and effective communication about identified risks (automatic alerts when key project budget spending thresholds are reached, for example, 50%, 75%, etc.).

Communication, the cornerstone of anticipation

Transparent, regular communication with all project stakeholders is essential. It enables progress, challenges and budget adjustments to be shared in real time.
Regular follow-up meetings, progress reports and the use of collaborative platforms are all ways of ensuring effective communication.

Ensuring the operation: use project budgeting from start to finish to improve results

Budgeting should not be seen as a one-off task performed at the start of the project. On the contrary, it should be integrated throughout the project lifecycle, allowing continuous improvement of results.

Define a clear scope and precise objectives

Defining the project scope and identifying objectives are the first steps toward successful budget management. This includes creating a detailed Work Breakdown Structure (WBS) that helps understand all the project components and facilitates the estimation of associated costs.

Choosing the right budgeting methodology

Depending on the type of project, different budgeting methods can be applied, from top-down to bottom-up budgeting to value-based budgeting. Each method has its advantages and can be chosen based on the nature of the project, the industry, and the preferences of the management team.

Continuous monitoring and iteration for continuous improvement

The key to successful budget management lies in continuous monitoring and iteration. This means regularly monitoring expenses against the planned budget, adjusting estimates based on project changes, and implementing corrective measures as needed. Using integrated project management tools can greatly facilitate this task by offering real-time visibility on budget performance and allowing quick adjustments.

Heal without scars and become Furious to develop your profitability

It is now proven that adopting an integrated software solution can revolutionize your agency’s budget management. Furious, a true all-in-one co-pilot, is the ideal tool to ensure not only flawless financial management but also optimize all of your agency’s operations.

Streamlining processes with Furious

Furious offers a centralized platform for managing all facets of a project – from initial planning and budgeting to invoicing and performance tracking. By integrating financial data, time tracking, and project management in one place, Furious simplifies processes, improves data accuracy and facilitates informed decision-making.

Enhancing collaboration and transparency

Effective communication is at the heart of successful project management, and Furious facilitates this collaboration. By offering real-time visibility on budgets, expenses, and project progress, all stakeholders – whether the project team or clients – have the necessary information to act proactively and adjust plans as needed.

Real-time monitoring and automatic alerts

One of Furious’s key advantages is its ability to provide real-time updates and automatic alerts on the state of budgets and projects. This feature allows project managers to stay ahead of potential overruns, take corrective action quickly, and ensure projects stay on track for profitability.

Data-driven decision making

Furious transforms project management data into valuable insights for decision-making. Through detailed reports and profitability analyses, CFOs, CEOs, COOs, and your teams can deeply understand their projects’ financial performance, identify trends, and take strategic measures at their level to improve future profitability.

What are you waiting for to take the plunge?

With the right strategies and tools, it is possible to overcome the challenges of financial management in agencies and secure the profitability of your projects. Focus on anticipation, communication, and using flexible budgeting methodologies, and you can significantly improve your results.

By leveraging Furious for its real-time monitoring, collaboration, and analysis capabilities, your agency can not only heal deficits without leaving scars but also pave the way for increased profitability and lasting success.

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