Creatives 'lack financial sense'

Creativity and strict financial controls must learn to co-exist if agencies in the creative industries are to remain profitable and internationally competitive.

Despite efforts to juxtapose finance with creativity, Britain’s agencies specialising in ideas are losing money everyday because the gap between the two is widening.

Financial directors only care about cash, while the creative teams whose accounts they administer only care about generating award-winning ideas.

Such is the perception emerging from a new survey of 1,000 financial directors, which found an absence of monetary focus among creative teams is being found out by clients.

The findings of the survey, obtained by Freelance UK, show that the overwhelming majority of client companies do not perceive their creative agents as being trustworthy.

Just over half of respondents would struggle to” clearly demonstrate costs and processes” to a client, despite the fact that most are insisting transactions must become more transparent.

The problem lies with creative teams, the FDs responding hinted, by suggesting that almost a quarter are totally oblivious to the need for any financial processes in the creative process.

Most agencies harbour negative feelings to the idea of monetary controls, almost 60% of their staff think finance is someone’s problem, while a further 40% believe finance is beyond their remit.

A bad attitude towards costs, and a belief that finance is dull and boring, is “heavily impacting” on agencies’ “bottom line profitability,” said experts at Maconomy, which commissioned the survey.

The company, which provides software to optimise financial management such as on a creative project, warned that the bad habits of an agency’s creative team will be difficult to break.

But directors must take action for the good of their agency’s profitability: the survey found 68% of creative firms have over-serviced accounts and undercharged client companies.

In light of late payment legislation, the Better Payment Practice Group also has its work cut out, as 80% of creative agencies never charge interest to tardy invoice payers.

Neil Backwith, a profitability consultant to the creative services industry, said: “In a situation where an agency doesn't have accurate time information and transparency, it would appear that not only do they lose the trust of their clients but those very same agencies are also the ones who ‘write off’ the biggest amounts of time through over–service. This is a double whammy of less profit and less trust for Agency Britain.”

Building a sense of trust and demonstrating transparency is therefore vital if agencies are to prosper in the long-term, according to Hugh Stafford-Smith, managing director of Maconomy.

“Transforming internal processes in order to demonstrate account transparency will go a long way in strengthening the agency-client relationship and engender an atmosphere of trust,” he said.

His company’s survey pointed to the age-old problem of how agencies can keep their clients happy, while ensuring their profits continue.

In a statement, Maconomy reflected: “The key finding from the research highlighted that financial processes and creativity can, and must, co-exist to improve agency profitability – as two thirds of agency FDs agree that this makes for a successful agency.”

It added that training and education were labelled as the primary tools to combat creatives’ reluctance to becoming “financially responsible.”

Coupled with improved communication between finance and creative departments, this “sets precedence for long lasting behavioural changes,” the company advised.



 

24th October 2006

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