Creating Your Chart of Accounts

Financial reports.

 Like it or not, you have to deal with them if you want to scale your agency.

 This is especially true if you’re switching to the value-based pricing model. Without detailed reports, you can’t scratch beneath the surface of your numbers. As a result, you can’t move away from hourly billing.

 Among all the financial reports that will hit your desk, the chart of accounts offers particularly valuable insights.

 > > > Find out how we can help streamline reporting for your agency.

What Is Your Chart of Accounts?

In essence, it's a listing of every account in your company’s book, including:

• Assets
• Liabilities
• Revenue
• Expenses
• Equity
• Other essential accounts

Your chart of accounts provides a clear overview of all business aspects, with financial details specific to your industry. It’s quite flexible and allows you to add accounts for any new business aspect that might emerge. 

 When you review the chart, you'll be able to determine average figures for earnings, product value, and other crucial financial factors of your agency. Simultaneously, you'll detect areas that require changes or adjustments. As a result, you’ll have clear guidelines for pricing based on value. 

Creating Your Chart of Accounts

It's possible to create a chart of accounts as a simple Excel file, but you should build it out in an accounting platform. The latter is a bit more complex but it will allow you to automate and systematize various analysis and operational aspects.

 Since the process must be free of human errors, a good way to ensure that is by having sufficient margins in every project and focusing on budgeting correctly. 

 The information obtained from those comparisons can be invaluable moving forward, especially for an executive-level view of projects. 

 It’s possible that the detail presented is more than you would need. On the other hand, you can also find yourself in a scenario where some information isn't available. It’s always better to summarize too much information than fill the gaps where information is lacking when it comes to reporting.

 Proper reporting and reviews of the chart of accounts will allow you to learn from every project and tighten your budgeting for the next time. Your accuracy and profitability could improve every time you go through the process. 

If you need help with reporting and structuring your financial plan, don't hesitate to schedule a profitability accelerator call.