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Bookkeeping probably isn’t the reason you started an agency. You started it to solve problems, serve clients, build a team, and create something that could grow. But as the agency gets busier, the numbers behind the business become increasingly important.
In this Mastermind Speaker Series session, Nathan Hirsch of Ecombalance shares a practical approach to bookkeeping for agency owners. Rather than diving into technical accounting, Nathan focuses on what entrepreneurs actually need to know: who should handle the books, what financial reports owners should understand, how often they should review them, and how better financial systems lead to better business decisions.
Prefer to watch? The full conversation is available in the video below.
The First Mindset Shift: Agency Owners Shouldn’t Be Doing Their Own Bookkeeping
Nathan’s foundational advice is refreshingly simple: agency owners generally shouldn’t be doing their own bookkeeping.
Even if you understand accounting, your time is usually more valuable elsewhere.
An agency owner has a limited number of hours to devote to sales, marketing, hiring, client relationships, strategic decisions, and expansion. Spending those hours reconciling transactions or categorizing expenses can become an expensive use of the owner’s time.
There’s another problem with the DIY approach: mistakes can become costly later.
Nathan explained that bookkeeping cleanup projects often involve businesses whose owners managed the books themselves for months—or even years—only to eventually pay a professional to redo the work.
The better approach is to establish the right process early.
As Nathan put it, even if you were a bookkeeper or CPA in a previous career, doing your own books still may not be the best use of your time.
That principle extends to delegation, too. Hiring an inexperienced VA and then attempting to teach them bookkeeping isn’t necessarily a shortcut. If neither the owner nor the VA has strong bookkeeping expertise, the agency may simply be creating another process the owner has to manage.
Should You Hire a Bookkeeper From Day One?
Nathan’s answer is yes.
When he and his business partner were building FreeUp, they hired a bookkeeper while the company was still in its earliest stages. The reports weren’t necessarily showing impressive profits yet—but that wasn’t the point.
They could see where their money was going.
They could understand what was happening inside the business.
And they could make decisions based on actual financial information.
That discipline eventually became especially valuable when FreeUp was sold. Nathan explained that the company entered due diligence with clean books going back to the beginning.
For agency owners, the lesson is bigger than simply keeping the accountant happy at tax time.
Good bookkeeping creates decision-making infrastructure.
Bookkeeper, CPA, or CFO? Know Who Does What
One source of confusion for growing agencies is understanding which financial professional should handle which responsibilities.
Nathan recommends thinking about the financial side of the business as three distinct roles.
The Bookkeeper
Your bookkeeper maintains accurate financial records and provides the reports you need to understand what is happening in the business.
This is the foundation.
Nathan recommends having a bookkeeper from the earliest stages of the company rather than waiting until transactions become complicated.
The CPA
Your CPA or tax professional handles tax-related matters, such as:
- Tax planning
- Estimated taxes
- Tax filings
- Tax-related advice
Nathan also recommends finding a CPA who understands your industry. For an agency owner, that ideally means working with someone who already serves other agencies.
He cautions against assuming that tax-oriented bookkeeping will automatically produce the best management information. A set of books can be perfectly adequate for filing taxes without being organized in the most useful way for making monthly operating decisions.
The CFO
A CFO operates at a different level.
Rather than maintaining the books or filing taxes, a CFO can help with forecasting, financial strategy, KPIs, projections, and major business decisions.
But most startups don’t need to rush into hiring one.
Nathan pointed out that he grew FreeUp to roughly $12 million in annual revenue without a CFO. In his view, owners should first become capable of understanding their own numbers and making sound decisions from them.
As the organization becomes significantly larger and every financial decision carries more weight, CFO expertise may become increasingly valuable.
Bookkeeping for Agency Owners Starts With the Right Systems
Your financial process is only as smooth as the systems supporting it.
Nathan recommends using established cloud-based accounting platforms such as QuickBooks Online or Xero and choosing the platform your bookkeeper can work with effectively.
The specific platform matters less than creating a reliable system and maintaining ownership of your financial information.
Always Own Your Books
This point deserves emphasis.
Your agency should own and control its accounting account. The bookkeeper should receive the access needed to do their job.
Why?
People leave. Vendors change. Relationships end. Companies close.
If a third-party provider controls the only administrative access to your financial records, changing bookkeepers can become far more complicated than necessary.
Owning the account allows you to remove access from one provider and give it to another without losing control of your financial history.
Make Your Financial Stack Easy to Manage
Nathan also recommends choosing banks, credit cards, and payment processors that allow secure view-only access.
Your bookkeeper shouldn’t need the ability to move money around. They need access to the information required to do the books.
View-only access also reduces the amount of monthly administrative work landing back on the agency owner.
Instead of downloading statements and emailing them every month, the bookkeeper can retrieve the information needed to keep the process moving.
A few simple principles can make a meaningful difference:
- Keep business and personal accounts separate.
- Use dedicated business accounts.
- Choose financial providers that support appropriate user permissions.
- Give bookkeepers only the access they actually require.
- Avoid creating unnecessary bank and credit card accounts.
- Develop clear rules for which cards and accounts are used for which expenses.
Simpler systems are generally easier to manage, easier to understand, and often less expensive to maintain.
The Monthly Financial Meeting Every Agency Should Have
This may be the most actionable idea from Nathan’s presentation.
Bookkeeping should happen monthly, and agency owners should actually review the results.
Waiting until tax season defeats much of the operational value of bookkeeping.
Nathan recommends closing the previous month and receiving your reports by roughly the 10th to 15th of each month. Then schedule a recurring financial meeting that happens like clockwork.
The three primary reports to review are:
- Income statement
- Balance sheet
- Cash flow statement
Review them with the appropriate people in your organization—whether that’s a business partner, spouse, leadership team, or another key stakeholder.
Then compare performance.
How did this month compare with last month?
How does it compare with the same month last year?
Where are expenses changing?
Which services are growing?
Are payroll costs increasing faster than revenue?
Where are margins improving or declining?
That’s where bookkeeping shifts from an administrative obligation to a management tool.
Agency Owners Need to Know How to Read Three Financial Statements
Outsourcing your bookkeeping doesn’t mean outsourcing your understanding of the business.
Nathan argues that entrepreneurs should learn to read an income statement, balance sheet, and cash flow statement.
You don’t need to become an accountant.
You do need to understand what the numbers are telling you.
And one of the easiest ways to learn is through repetition. Review your agency’s reports every month. Ask your bookkeeper or CPA questions when something doesn’t make sense. Over time, your financial literacy improves alongside your knowledge of the business.
Think of it like hiring.
You don’t need to personally perform every job in your agency, but if you have no ability to evaluate talent or understand how your team is performing, scaling becomes considerably harder.
Finances work much the same way.
Delegate the bookkeeping. Don’t delegate your understanding of the numbers.
Cash vs. Accrual Accounting for Agencies
Agency owners should also understand the basic difference between cash and accrual accounting.
With cash-basis accounting, revenue and expenses are generally recognized when money actually moves.
With accrual accounting, revenue and expenses are recognized based on when they are earned or incurred rather than simply when cash enters or leaves the account.
For a straightforward agency with fast payments and relatively simple operations, cash accounting may provide what the business needs.
But accrual accounting can become more useful when timing differences grow.
Imagine an agency closes a $10,000 engagement in July but doesn’t receive payment until September. Looking strictly at when cash arrives can make July’s operational performance look very different from what actually happened.
The appropriate method depends on the business, and this is an area where your CPA can provide guidance.
The broader lesson is to understand what your reports represent. Profitability and cash flow are related, but they aren’t always the same thing.
Segment Your Books to Answer Better Business Questions
Financial statements become more valuable when they’re structured around the decisions you actually need to make.
At FreeUp, Nathan and his team segmented revenue between fixed-price and hourly freelancer services.
That allowed them to see not only total revenue, but how each offering was performing.
Agencies can apply the same idea.
For example, an agency offering SEO, PPC, social media management, and web development may benefit from seeing revenue or profitability segmented by service.
That can help answer questions such as:
- Which service lines are growing fastest?
- Which generate the strongest margins?
- Where is payroll or contractor spending increasing?
- Is one service subsidizing another?
- Where should the agency invest its sales resources?
- Which offerings deserve more—or less—attention?
You don’t necessarily need the perfect structure on day one.
Nathan recommends refining segmentation over time as you learn which information helps you make better decisions.
Clean Books Can Make Your Agency More Valuable
Nathan’s experience selling FreeUp illustrates another benefit of disciplined bookkeeping: credibility during due diligence.
During an early conversation with the eventual buyer, Nathan and his partner were asked detailed financial questions.
They knew the answers.
They knew their sales numbers, margins, and customer concentration. More importantly, when the buyer later examined the company’s books, those numbers matched what Nathan and his partner had said.
That consistency built trust.
Compare that with an agency entering an acquisition conversation only to discover its books are months behind or that the numbers don’t match the owner’s expectations.
Catching up isn’t always quick. A year’s worth of bookkeeping can’t necessarily be cleaned up accurately in a few days simply because a potential buyer is waiting.
Even if selling your agency isn’t currently on the roadmap, maintaining accurate books keeps options open.
Better Financial Systems Give Agency Owners More Room to Lead
The biggest takeaway from Nathan’s session isn’t that agency owners need to become bookkeeping experts.
It’s almost the opposite.
Build a process that allows qualified people to handle the bookkeeping while giving you reliable financial information you can use to lead the company.
That means:
- Hire bookkeeping expertise early.
- Keep bookkeeping, tax, and CFO responsibilities clear.
- Maintain ownership and control of your financial accounts.
- Keep the financial tech stack as simple as practical.
- Review an income statement, balance sheet, and cash flow statement every month.
- Learn to understand what those reports are telling you.
- Segment your books around meaningful business questions.
- Use the numbers to make decisions instead of simply collecting reports.
The objective isn’t immaculate spreadsheets for the sake of immaculate spreadsheets.
It’s clarity.
The more clearly you understand the financial engine behind your agency, the easier it becomes to decide where to invest, what to change, what to stop doing, and where your next growth opportunity may be.
And the same principle applies beyond bookkeeping. Agency owners create more room to lead when specialized work is supported by reliable people and processes instead of continually landing back on the owner’s desk.
That’s a big part of how we approach White Label Digital Marketing at That! Company. We work behind the scenes as an extension of our agency partners—including client communication and sales support—so agency owners can spend more time working on the agency instead of constantly working in it.
Strong businesses aren’t built by owners doing everything themselves. They’re built by creating the systems, partnerships, and visibility that allow the owner to make better decisions.
