In this business, organization is everything. Similar to our digital asset management system, we live and die by what’s on our books (and in the cloud). So in Q1 of 2019, when we overhauled our operational systems, expense management was at the top of the list. Now that we’re up and running (and loving it!), we’re sharing what changes we made, why they work, and how they support #TeamGreyHouse’s goals.
Quickbooks → Xero
Our first move was to make the transition from Quickbooks to Xero. With our Operations Manager Colleen Sarihan at the helm, we adopted Xero for its clean interface, thoughtful dashboard, and nimble management of cash flow. Especially with overlapping projects dipping into so many different budgets simultaneously, there’s a lot of money changing hands. And Xero is just better at keeping track of it all — especially for invoicing, which is huge given all the vendors we deal with. One of the biggest perks we’ve seen with Xero is a better understanding of the profitability of each client project, so that we can be better informed when it comes to the types of projects we want to take on moving forward. And, it shows our billing as an honest reflection of the time spent.
Allocation, allocation, allocation.
Before, we had a general sense of how costs broke down between client jobs and overhead. But now it is so detailed, we can track a $5 coffee down to the client level, and we’ve been able to do it in a way that’s not burdensome. That’s because we’ve developed a really strategic method of allocation for receipts. We now have the option to track not only expenses that aren’t billable to a specific job, but are grouped as part of that job. If we take Client A to dinner, or create gift bags for Client B, each expense is tagged to a specific job number, rather than general overhead. For example, we now know exactly how much we’re spending on client entertainment that is tied to a job — but not billed to a job. We also set up an email that auto-forwards receipts to our Finance department anytime something is entered. If one of us goes to a hotel or swipes something on Square, it’s automatically in the system, so we don’t have to manually scan the receipts later.
To navigate the sheer volume of client expenses, we’ve buckled down and defined a shorthand language that maps to our chart of accounts. Now, everyone on the team is consistent in coding what goes into the software system, so it translates into easy reference down the line. Deciding on the codes was a process, for sure! We wrote down absolutely everything that could feasibly be part of a job description, then used color-coded Post-Its and war-boarded where it made sense to group things together. But now that it’s done, it’s brilliant. Almost like a POS system at a restaurant, we’re now numbering all aspects of our business — including spec shoots that may not transpire into fully-realized client work — so that every single expenditure has a home.
Knowledge is power
Thanks to our new system for allocations and shorthand, we’re able to look up who our top-grossing clients are down to the penny. It’s really given us perspective on jobs won vs. lost, how much we spend on Agency X or Client Y, and lets us see the forest for the trees. Plus, it helps us keep a real-time pulse on our money and manage financial projections rooted in accurate data, so our company overhead is calculated a year in advance.
For more on how we use Xero and other digitally savvy systems that do the heavy lifting for us, check out this post on why we run our business from the cloud.