Constantly worrying about your agency’s financial health is a clear sign of imminent failure. A common financial mistake can cost your agency a lot of money. So, why wait so long to fix it? In the words of Benjamin Franklin, one of the founder fathers of the United States, “a penny saved is penny earned”.
Financial planning should never be an afterthought! It must be an essential part of your business plan and strategy. Moreover, it will help you determine your short-term and long-term goals, as well as keep the business on track.
Education and migration agencies generally suffer from issues like improper invoicing and inability to track commissions accurately. However, there are other financial mistakes too! Here are five common financial mistakes agencies make and ways to fix them:
Failing to plan monthly business performance
Relying on an annual budget or financial forecast is like making decisions on guesswork. Your agency’s financial update needs to be more regular than that. A solid budget requires the following information, presented on a monthly basis:
Breakdown by your product or service line and calculate the number of sales you are achieving on a monthly basis.
Cost of sales
These costs will vary with each sale, but they need to be calculated. The cost of sales includes every expense that went into making a particular sale, including expenses like travel or overtime.
Unless there are any significant changes, you can use overheads from your most recent financial statements and adjust them for any known or expected increases. This decreases your financial mistakes.
Cash flow forecast
Look at your cash inflows and cash outflows. It needs to account how long your clients take to pay you, any loan repayments that are due and potential capital expenditure to avoid financial mistakes.
Cutting costs instead of increasing revenue
It is common for businesses to cut costs in order to increase profits. From downsizing your agency staff to limiting office supplies, sometimes too much attention is on reducing expenses that may not be hurting profits.
Instead, you can focus on the drivers of revenue. Once you understand these driving factors, you can put in place strategies to enhance and increase each one of them:
Number of partners and clients
Each month, calculate the number of clients and partners you have and maintain a record. Whether it is one client and partner or a hundred, list them out to avoid financial mistakes.
Frequency of services used
Calculate the number of times they have used your agency services. Education and migration agencies can easily have clients, who will use your services quite often. You can also count how many times they have referred your services to others.
The sale value
In simple terms, a sale value is the amount of money you expect from your agency services. Besides being competitive, make it a point to assess whether your prices are relevant to your costs or not.
Operating your agency business with a spreadsheet
In this era of cloud-based agency management and accounting solutions, management of information is readily available. Yet, some businesses continue to keep their records in spreadsheets or bookkeeping. This way, many important financial details can fall through the cracks. This leads to the creation of financial mistakes your agency can sort this out with some simple steps:
Get management software
Agency management software is efficient, effective, and easy to use. It is an investment worth making, that will add value to your business overall.
Train your staff adequately
Acquiring or subscribing to the software is obviously not enough! Your agency must train its staff to use it optimally too. Include everyone who may use the software, as its features are extensive, and not just for the accounting staff.
Integration is essential
Finance is not a separate entity of your agency business. Your team needs to understand that all departments must work together to achieve the agency’s business goals, even the financial ones. Management software helps integrate all these components and reduce financial mistake.
Making financial mistake while invoicing
Improper invoicing is a common financial mistake in the education and migration industry. Without a proper tool to keep track of finances, errors like this happen quite frequently, and your business loses money. Here is how an Agent CRM software can help you rectify this issue:
Customize your invoices
Your agency needs to send invoices to business partners like colleges and universities, as well as clients. Regardless of the number of partners and clients you have, you can create and customize invoices, as per their needs.
Set system triggers
You can set triggers for each stage of the invoicing cycle so that you know when and where to send the invoices steering clear of financial mistakes. Such efficiency keeps your agency’s partners and clients on track, thus maintaining your professionalism and financial discipline.
Receive notifications from other departments
You can make use of the software’s connectivity with other departments in the agency, to understand the relevance of each invoice. For instance, your agency’s financial policy may be to invoice a client once the application is complete. In this case, the counselors can notify and add their comments, as to when and where the invoice is due. This will reduce the financial mistakes in your agency.
Inability to track commissions effectively
As your agency’s partners and clients grow in numbers, the occurrence of financial mistakes increases. The ability to keep track of commissions becomes even more important. The most effective way is to know which partner you are commissioning from and the client’s application status. Again, agency management CRM will come in handy:
List all the details
Listing all details will help you evade financial mistakes. You can note down details like name of the partner, client, amount of commission, due dates, and status of invoices, all on the same platform.
Keep track of all invoices
With CRM, you can keep track of both commission and invoice , receive daily notifications about their status and avoid financial mistakes.
You must know when and where to follow-up! With agency CRM, if a commission is past its payment date, you can receive notifications to follow-up immediately and settle the amount preventing any financial mistake.
Your agency’s financial health will not only determine short-term and long-term business goals but will attract potential investors as well. Besides avoiding common financial mistake and running the business smoothly, the ability to show and maintain efficiency adds tremendous value to your agency!