Project managers are used to tackling a project budget and ironing out specifics within it, but have you ever thought about the bigger picture? The finance department at a creative agency has to take care of project budgets and general expenses, and make sure that everything can be balanced. Not every aspect of finance is essential for the daily work within the projects. But even so, knowing what goes on before your project budget is delivered is helpful.
Accounting for assets and spend on any agency-wide capital projects
Every project manager should be keeping tabs on the budget and expenditures for his or her projects. But when the agency as a whole is conducting a capital project, someone needs to be in charge of the accounting. That’s where the finance department steps in. All revenue and spend eventually will wind up in the finance department, but it becomes very important when there’s not a specific project to charge for it.
Equally important is the accounting for assets. Perhaps you’ve purchased new workstations for the entire floor. This is not attributable to any project budget, and it belongs to the company, not to a specific project. Finance needs to be aware of the location and condition of these workstations, to make sure that they are properly documented and accounted for at the end of the fiscal year and may need to be involved in the decision making for the expenditure.
Control of expenses, debt, and payroll
Just as assets and billing belong to the finance department, so does overall control of other disbursements. Any expenses, outstanding debt, and payroll fall under the finance department umbrella. Many of these also may be accounted for in a project budget as well, so project managers take note!
Miscellaneous expenses, such as supplies, utilities, or other general amounts, often belong to the company. But expenses due to a specific project can be reallocated or purchased specially. Being aware of your expenses on each project will quite literally pay off if a general expense is mistakenly allocated to your budget and a watchful eye catches it.
Payroll and debt are not areas that impact project managers as much as expenses. When using billable hours to define the project budget, though, payroll does become a consideration. After all, you can be sure that any payroll issues stemming directly from recorded hours will reach your desk! Make sure that you’re reporting all essential informatioan as needed. In a similar fashion, any debt incurred would be for agency-specific issues.
Acceptance of all revenue
On the other side of debt and expenses, there’s revenue. If your project does well, the client accepts all work and is paid in full. Congratulations! Finance department functions include taking charge of accepting and collecting the payment from the client.
In addition to collecting the revenue, the finance department also anticipates all revenue. This is another step to project budget and reporting, and will help determine whether a loan or private investment is required to continue agency work. When projects run past deadlines or clients do not pay as expected, this can change the revenue planning.
Last, but certainly not least, the finance department reports to management and investors. This can include current and prior year amounts for both revenue and expenditures, as well as any market indicators. For a project manager, some of these numbers might be unnecessary knowledge. However, in the overall agency outlook, knowing whether revenue is growing or shrinking can be useful, These trends can impact new projects and capital acquisitions, which in turn can have a big effect on the strategic direction of the agency and your next project.