Improved YoY Gross Profit Margin and financial insight with fractional controller services
Improved and reliable reporting using ORBA Cloud CFO’s outsourced controller services offer Logical Media Group a lens into profitability and a true gross profit number.
You should book a free consultation if:
- You ‘re behind on reconciliations.
- You feel like you’re still missing a piece of your financial picture.
- You can’t seem to make sense of your financial reports.
- You want better insight into your best sales channels and customer profitability.
Business Overview
Founded in 2006, Logical Media Group is a full-service digital marketing agency. Logical’s original core competency was in generating qualified website traffic through Search Engine Marketing, with a specialization in Pay-Per-Click Advertising and Search Engine Optimization. They have since built out expertise and specific teams tailored towards other online channels such as Amazon, Social Media Marketing, Email Marketing, Display Advertising, Conversion Rate Optimization and Web Design.
Industry: Marketing & Advertising
BAckground
Given its large roster of clients, Logical Media Group’s books grew to be complex. “Our finances are complicated. There are a lot of moving parts because we manage ad-buying for clients,” states CEO, Chris O’Neill.
When their finance manager left the company in 2019, Logical’s husband-wife duo hired ORBA Cloud CFO to, in O’Neill’s words, “wrangle the horses when all the fences went down… and it was a huge success.”
Fast forward to the end of 2021, when a friend with a marketing background launched an accounting platform, Logical transferred all their accounting services in the hopes it would meet all their needs from bookkeeping through to cash flow forecasting. Unfortunately, after trialing it for some time, the O’Neill team quickly realized their books and chart of accounts were a mess. They were able to gain some useful forecasting of cash flow, but no longer had confidence in their P&L.
It didn’t take long for Logical to rehire ORBA Cloud CFO to take over their bookkeeping and controller services again.
"Our finances are complicated. There are a lot of moving parts because we manage ad-buying for clients. ORBA Cloud CFO wrangled the horses when all the fences went down... and it was a huge success."
Challenges
Bookkeeping Breakdown
After moving their accounting services elsewhere in 2021, Logical was left with books that no longer painted an accurate financial narrative. The P&L needed serious help, reconciliations were 6+ months overdue, and payroll was being booked incorrectly, which made financial reporting very difficult to understand.
Financial Reporting
While Logical had a new tool to use for cash flow forecasting, the reports they needed to generate accurate forecasts were a challenge. Logical has some Monthly Recurring Revenue (MRR), but there is a reasonable amount that is not recurring. Plus, with their media account revenue, they couldn’t use cash inflows as a reliable growth indicator. Director of Finance, Lauren O’Neill, explains, “with a lot of bank accounts for clients’ media money, we needed to know how things should be classified. The media revenue was inflating the P&L and balance sheet.”
Solution Framework
Bookkeeping Clean Up
Nick is super-fast and accommodating whenever there is anything we want to change. He [and Jason] had our books back up and running in 60 days or less,” explained Chris O’Neill.
ORBA Cloud CFO’s combination of both fractional controller services, and bookkeeping services, offered an efficient team approach to solving Logical’s back-office clean-up needs.
Financial Reporting
While the ORBA Cloud CFO team ensured all reconciliations were executed first, their controller expertise is what really added value for Logical. As Logical’s fractional controller, the ORBA Cloud CFO team realigned the chart of accounts and adjusted month-end reporting to better illustrate Logical’s true gross profit margin (GPM) on the P&L.
ORBA’s Cloud CFO services provides Logical Media Group with a dedicated team of financial professionals, proactive reporting, weekly check-ins, and monthly meetings. Drawing on ORBA Cloud CFO’s controller services, Logical can understand and analyze other important company-specific metrics like their labor cost percentage.
Results
With regular outsourced bookkeeping and controller services, Logical is confident their books are being closed accurately and on time.
Improved and reliable reporting offer Logical Media Group a lens into profitability and a true gross profit number. CEO, O’Neill elaborates, “we use this data to make decisions moving forward. There are things I’m losing sleep over, and my books aren’t one of them. I feel like we’re safe and in control.”
Figure 2. From 2022 to 2023 YTD, Logical Media Group experienced a positive Gross Profit Margin (GPM) trend with excellent forecasts to continue a stable profit pattern through 2023.
Add in their solid GPM compared to industry peers, and Logical is trending toward a sustainable profit-pattern entering into Q3 of 2023. “It’s financial management of our organization that is imperative to its success,” says O’Neill.
"It’s financial management of our organization that is imperative to its success,” says O’Neill.
Forward Thinking
What’s next for this growing marketing firm?
With a new methodology to connect time tracking to financial reporting, Logical can now see if their labor cost is profitable. This has pushed LMG to consider how to do more with this forward-thinking approach to their financials.
Given the better reporting from the chart of accounts through to month-end, Lauren O’Neill says, “we now have the financial understanding we need to make better business decisions.”