Most agency founders start by managing their own finances. A spreadsheet here, a QuickBooks subscription there, and maybe an accountant who files your tax return once a year. But at some point, that stops working. The question is: when?
The DIY Phase (£0-£250k Revenue)
In the early days, doing your own bookkeeping makes sense. You're lean, you're learning, and you can't justify the cost of outsourcing. But even at this stage, you should:
- Use proper accounting software instead of spreadsheets
- Track income and expenses consistently
- Separate business and personal finances
- Have a basic understanding of your cash position
The Tipping Point (£250k-£500k Revenue)
This is where most agencies start to struggle. You're growing, but your financial systems haven't kept pace. Here are the signs it's time to bring in help:
- You're spending hours on bookkeeping: Time you should be spending on clients or growth
- You don't know your real profitability: You can't tell which projects or clients are actually making you money
- Cash flow surprises: You're regularly caught off guard by tax bills or cash shortages
- You're making decisions blind: Should you hire? Invest in marketing? You don't have the data to decide
- Tax planning is reactive: You only think about tax when your accountant sends the bill
What a Finance Partner Actually Does
A good finance partner is a strategic advisor who helps you:
- Get clear on your numbers: Monthly management accounts that actually make sense
- Plan ahead: Cash flow forecasts and budgets that guide decision-making
- Improve profitability: Identify which services, clients, or projects are most profitable
- Optimize tax: Proactive planning to minimize your tax bill legally
- Support growth: Financial modeling for hiring, expansion, or investment decisions
The Growth Phase (£500k+ Revenue)
Once you're past £500k in revenue, a finance partner isn't optional, it's essential. At this stage, you need:
- Regular management reporting (monthly at minimum)
- Rolling cash flow forecasts
- Project-level profitability tracking
- Strategic tax planning
- Financial modeling for growth scenarios
In-House vs. Outsourced
Should you hire a full-time finance person or outsource? Here's the reality:
- In-house: Makes sense at £1m+ revenue, but you're paying £40-60k+ for a finance manager
- Outsourced: More cost-effective for most agencies, and you get senior-level expertise without the full-time cost
The Bottom Line
If you're spending more than a few hours a month on finances, or if you're making big decisions without clear financial data, it's time to bring in a finance partner. The cost is an investment that pays for itself in better decisions, improved profitability, and peace of mind.
Once you've brought in finance support, you'll want to understand which financial metrics to track monthly and how to implement a simple forecasting framework that actually works. These tools help you avoid the most common cash flow mistake agencies make.
Found this helpful? Share it: