How to manage finances on a long-term project and not be left without money

Together with the Fintablo service, we figure out how to accurately plan finances, downloads for a long-term project and business in general — using the example of content production for YouTube

The experts of this text were professionals from the Fintablo service team — an online financial and management accounting service for your business

When things go wrong on projects — and what to do about it

Let’s imagine that our company creates content for YouTube channels. The customer came and asked to do it beautifully. To begin with, we decided to record five videos, and then depending on the situation. We calculated the load, estimated the budget, divided it into stages and got to work.

And then it began: the customer wants something new every time, approval is delayed, payment is delayed. But we have to pay people salaries, pay rent — plus new projects are on the way, and we haven’t figured it out yet.

This happens due to a lack of preliminary planning and unregulated processes, including finances.

Here’s what to do here:

• Assess the benefits of the project in advance
• Plan your overall budget and workload
• Link costs to project stages
• Calculate profits for each stage and the project as a whole

Let’s go through these stages and show you how, with the help of management accounting and its automation, you can take control of the timing and finances of the project and forget about the confusion.

Management accounting in a nutshell

Management accounting is just three reports on the financial component of projects. They reflect information on all expenses and income that were, are and will be on the project:

• Payment calendar is a plan for expenses and receipts that helps you monitor the movement of money.
• Profit and loss report — shows how much was ultimately spent on implementation and earned from a specific stage or project as a whole ( OP&L ).
• Cash flow report — shows how much the plan for payments and receipts coincided with the fact ( ODDS ).

Fintablo

online financial and management accounting service

An automated service helps control business finances without accounting hassles and in a format convenient for non-financiers — with automated relationships between reports. The result is a minimum of manipulations — a maximum of information. The accounting methodology and templates are already inside and ready for use.

To the Fintablo website

Now let’s look at how to manage deadlines and finances when a project is delayed. And this happens almost always.

Assess the benefits of the project in advance

The sooner we start, the sooner we finish. And there is no time to figure out whether there were problems on a similar project and whether it brought benefits to the company. This is insufficient preliminary planning, which often leads to losses and the appearance of unprofitable projects in the company’s portfolio instead of profitable ones.

This happens when at the moment the estimates and deadlines are considered approximately, and the client’s new wishes are written down in a notebook and are not reflected in any way in the financial documents. As a result, half of the data is lost, and how much was actually earned is unknown.

Fintablo solution

• Proactively plan project expenses

Not manually and not in tablets — with the help of automation. This must be done in advance. The service has a Transactions module for this. You note the expenses, the cost of the project under the contract, and on the shore you see how much profit you will get. This way you can assess whether it is profitable to take on a task and project at all, whether there is a reserve, say, for a discount to the client, additional expenses, force majeure.

• Refer to analytics on closed projects

This retrospective helps evaluate new projects. For example, if a similar project a couple of months ago tripled in cost, we can assume that there will be problems with this too.

• Make adjustments to project data during implementation

After the start of the project, you can add stages, additional work, and change cost data. Analytics of the latest data will show whether there is enough money for the next stages or whether it’s time to issue an invoice to the client.

In Fintablo you can evaluate the profitability of individual stages and the entire project

Plan your overall budget and workload

We found out the profitability in retrospect, assessed the benefits in advance — we move on to launching the project.

What could go wrong here?

❌ Without automation, you will have to make your own table for each project: with deadlines, finances, targets, performers. Then bring together a mountain of tables to understand the team’s workload.

❌ If you keep records in tables, this will complicate production planning. It will not be possible to get a complete picture; drawing up estimates will take several days to weeks, and it will be impossible to find the error.

And here the project again faces serious consequences for management — in the long term: when the manager, due to piles of data, abandons a potentially profitable project, believing that the next month is busy. And this will prevent you from scaling your business.

Fintablo solution

• Refuse signs and create an automated estimate for the entire project

In 10 minutes and without data duplication. All data falls into three management reports: Payment calendar, Profit and Loss Statement (P&L) and Cash Flow Budget (CFB).

• Plan the workload of employees taking into account the created estimate

This will take another couple of hours. The manager will get a current picture before his eyes and will be able to assess whether the team has a reserve for new tasks. From here it is easy to plan the overall budget of the company and estimate the profit from the project.

Fintablo

online financial and management accounting service

Automation of financial management is part of digitalized project management. This helps control processes: from planning individual stages to analyzing the effectiveness of the project and the business as a whole. And it is in the first two stages that financial management of the project is laid down.

To the Fintablo website

Link costs to project stages

Let’s continue with the example of video content production. Projects consist of four main stages: pre-production, filming, post-production, publication and distribution. To control the movement of money at each stage, you need to link everything to them:

• cost of each stage,
• performers and their wages,
• deadlines,
• resources (equipment, software, materials for filming),
• unfinished work,
• planned and actual income and expenses, etc.

If you collect all this information in one place, you get a giant table. Only a financial manager can extract any useful information from it, and only if there are filters. Nobody likes this option, so they make it simpler — they plan by eye, without details.

Fintablo solution

• Manage each stage of the project separately

That is, for each, record the performers, deadlines, costs, planned and actual indicators. The team will work with one compact table. In the foreground are the main data. If necessary, you can go into the details of each stage.

• Capture current data

Data from the Transactions module automatically goes into three of our reports — the Payment Calendar, the Profit and Loss Statement and the Cash Flow Budget. All write-offs, receipts and acts for the project are recorded. We get a transparent financial side of the project — the team sees how close it is to the limits and goals for the project.

✅ Let’s look at an example of how it works.

1. 1.The customer made an advance payment for pre-production. Money immediately appeared in the system. The responsible employee linked them to the Plan/Actual DDS report for this order so that the data is not lost. But the advance is not yet a profit, because the work is not yet finished. You can’t waste it. The advance will become a profit after signing the deed.
2. 2.When the customer signed the pre-production act, the project manager entered the date of the act into Fintablo. Afterwards, the customer paid the remainder for the first stage, and the person responsible for accounting again linked the payment to the project. The service automatically summed up the results of the first stage: it calculated the amount of payments received, revenue excluding VAT and deducted expenses. The result was net earnings for the first stage.
3. 3.We moved on to filming. During the process, the customer wanted to change the location, add characters and effects. As a result, the estimate increased. Fintablo showed that the cost limit for the second stage has been exhausted. Issued an invoice to the customer. The first stage was completely closed.
4. 4.Before the start of the next stage — post-production — the invoice was issued again. The customer advanced the work. And so on for each stage.
5. 5.Now, even if the project is delayed, the company stays within the budget and manages without cash gaps — there is always money .

Calculate profits for each stage and the project as a whole

We have come to the end of the project. This is where you won’t be able to find out the final earnings for the project without management accounting. Where might there be pitfalls?

• All this time a lot of money was spent on employee salaries

This is an integral part of any project — part of the resources that are laid down at the beginning. Nevertheless, the salary could change during the implementation of the project: here a junior outgrew his position and asked for an increase, here one employee left and was replaced by a more expensive one, and somewhere an outsourcer asked for +50% for a protracted process.

• During the implementation of the project, unaccounted expenses accumulated

Due to their number, even small expenses can add up to a large sum. If they are not taken into account, the overall profitability will remain unknown.

• Without understanding the total earnings, it will not be possible to calculate the correct amount of dividends for the owner

There are situations when the owner withdraws his dividends from the budget, and then there is not enough funding for the next project. You have to return dividends or get into the budget of another project. Management will suffer because of this.

Fintablo solution

• Control each step of the project separately and the project as a whole

Income, costs, profit, profitability — everything is reflected in visual tables and graphs. As soon as the date of the act is entered into the service, costs and revenues are automatically reflected in the Profit and Loss Statement. This way the manager and owner will find out how successfully the stage or the entire project was completed, how much they earned and whether the figure coincides with the plan.

• Monitor the wage fund and look for ways to optimize

The payroll shows how much money goes to employees and how much goes to funds. It is better to tie the wage fund to each project. For the current project, this is important in matters of cost analytics and efficiency assessment. And in the future it will help to calculate resources and savings opportunities in advance.

💡 It is this approach that helps to collect reliable information for future evaluation of projects — and apply this knowledge at the first stage of planning.

We count the main thoughts

• Automation of financial accounting for a project is part of project management automation. And the main tool for planning and management is management accounting.
• Management accounting consists of three main reports: payment calendar, profit and loss report, cash flow report. These reports are needed for the stable life of the project and proactive planning of future projects.
• In order to proactively plan the launch of a new project, it is important to refer to previous reports on similar projects in the portfolio: see whether it was possible to meet the spending plans, what were the unforeseen and related additional expenses, how much money was spent on salary payments.
• To effectively manage a current project, it is worth calculating the profits and expenses for each stage and summing up interim results for each of them.