Recognizing the results of projects in an advertising agency can be carried out at two different times, each with its advantages and challenges.

Let’s define the moment in which we recognize the results

1. Recognition with Service Billing:

In this case, invoices are recorded in income statements regardless of whether the service was delivered or not. Although it offers accounting simplicity, it suffers from inaccuracies by not considering services delivered not billed or billed not delivered, which can distort financial reality.

2. Acknowledgment with Delivery or Reception of the Service:

Here billing is separated from the moment of delivery or receipt of the service. Although it involves the need to record additional transactions, it ensures accounting accuracy by faithfully reflecting balances at all times.

The decision of when to recognize the results will depend on the company and its preferred approach: whether they want the results to impact the financial statements when the invoice is issued or whether they prefer to record the results at the time of actual deliveries of the services.

What tools to use to recognize results

Here are three approaches to how you can do this effectively:

• Through the use of Excel spreadsheets
• Through accounting using complementary management systems 

1. Evaluation using Spreadsheets

The option of using Excel spreadsheets to adjust project results is perhaps the most common method, as it is simply done through adjustments, removing or adding the corresponding amounts, reaching the value you want. The high workload involved can lead to incomplete, expensive and inaccurate results. Furthermore, the quality of the analysis will depend on the person in charge of its preparation, which can lead to errors.

This method can be useful for those agencies that close their balance sheets once a year, but it becomes very laborious for those that need to do it monthly.

2. Precise analysis through Accounting.

Accounting emerges as the most accurate and efficient method to evaluate project results. This approach is based on the transactions carried out, allowing precise, unique and irrefutable results to be obtained in real time. By aligning documents and accounting records, a complete and detailed view of each project is obtained, in accordance with the structure defined in the chart of accounts and the defined revenue recognition method.

To achieve this level of precision, it is essential to address the following prior aspects:

• Parameterize accounting accounts in transactions.
• Post transactions at the time they are made.
• Reduce manual entry allocations to a minimum.
• Automate the calculation of exchange differences.

3. Use of External Evaluation Systems

There are external systems that seek to provide information on project results, although they are not integrated with the agency’s ERP system. However, these systems face challenges such as duplication of data entry, inaccuracies in not capturing all data, lack of consideration of factors such as exchange rate differences and additional expenses from different areas, in addition to generating significant costs.

Conclusion

Depending on your need for accuracy in information, one system or another may be the most appropriate system for your company. What is clear is that by using accounting you can always have accurate information, online and with minimal effort.

By applying these principles and precepts, where each transaction is related to a project, which in turn is linked to a contract and client, it is possible to access with a single click an online and real-time view of the status of each project. . This includes both income statements and comprehensive accounts, providing a complete and detailed view of the financial status of each project.