On another occasion we have told you that in the daily management of your advertising agency there are different jobs that may contain multiple concepts. Today we explain how you can know in real time the result of each of your projects.

A job can contain multiple concepts that require a different control and management and each concept can, in turn, have different managers in an advertising agency.

These businesses may work with:

• In-house production: who must manage time spent, client acceptance and delivery deadlines.
• External purchase/sale: Sometimes they also work with third parties, which must apply the controls of purchase orders, their correct executions (control to third parties) and their purchase invoicing. And the invoicing to the customer as a mirror of the purchase.

Why is it vital to manage jobs in projects?

Because each job can have different realities, the best practice is to group each customer request into a grouping, called a project. In this way it is possible to analyze its outcome as a whole as well as allowing the billing department to group all the different concepts into a single project.

A project can be considered as a Campaign that the customer wants, including in it all the concepts that they want to include, for example:

• Internal Production
• External Production
• Media Buying/Selling

How can I easily know the result of each project?

There are two ways to know the result of the projects:

• through accounting
• through an external system (or excel spreadsheets).

Analyze the results of the projects through accounting.

This is the most accurate and efficient system, since it uses the transactions that are being carried out to obtain accurate, unique and indisputable results at all times. Aligning the existing documents with the accounting.
In this way we will obtain without any effort, the complete balance of each project, with the detail that has been defined in its chart of accounts.

For this to happen, we must first make sure of the following aspects:

• the transactions have parameterized accounting accounts
• transactions are posted on the spot
• manual journal entry allocations are minimal or non-existent
• exchange rate differences are automatically calculated per transaction

Analyze project results through external systems:

Using external systems, which require revenue and costs, not connected to the agency’s ERP, will always cause:

• Duplicate data entry
• It is inaccurate because it does not capture the totality of data.
• It does not consider the results due to Exchange Difference
• It does not consider extra expenses applied to the project caused by different areas.
• It is costly
• Generally has errors

Analyze project results using spreadsheets:

Similarly to the above, using spreadsheets to analyze results by project will result in:

• No analysis of results by project
• The result of the analysis is inaccurate, expensive and not online.
• The result depends on the person who prepares it

At what point do I want to recognize the results of a project?

There are two ways to recognize results, which correspond to two different moments:

• Recognize revenue with the invoice for the service.
• Recognize revenues/expenses with the delivery or reception of the Service.

Recognize revenue with the Invoice

This is when the accounting of invoices are charged to an income statement, without considering whether the service was delivered or not.

Advantage:

Accounting simplicity.

Disadvantage:

Inaccuracy, since what is delivered and not invoiced (unbilled) and what is invoiced and not delivered (deferred) are not considered for accounting purposes. Both purchases and sales.

Example: If a job for a client is done in December but is invoiced in January or February, the result will be in the year of the invoice date, when in fact the time commitment or execution of the service was done in the following period.

Recognize with the Delivery or Receipt of the service

This is when the recording of the time of the invoice is separated from the time of delivery or reception. By recording in this way, we will automatically get the correct balances at all times.

Advantage:

Accounting accuracy. Balances at all times represent reality.

Disadvantage:

It is necessary to perform the delivery and receipt transactions in the system, in order to be able to post them. The company will have to decide how to account for the results, whether at the time of invoicing, i.e. the result impacts the financial statements when the invoice is issued (regardless of whether the service was actually delivered) or they will account for the results at the time of actual deliveries (revenue recognition).

If these preconcepts are met, as each transaction is associated to a project, and this project is associated to a contract and client, it will be possible with a single click, to know the status of each project, both the income statement and the integral accounts. You will be able to see the balance corresponding to each project online and at any time.