What accounting software is best for a social media agency?

Key takeaways

• Xero and QuickBooks Online are the top contenders for most social media agencies due to their strong automation, third-party app integrations, and user-friendly dashboards.
• The right software must handle agency-specific workflows like recurring retainers, project-based billing, and tracking client ad spend as a reimbursable cost.
• Integration with other tools is non-negotiable. Your accounting software should connect to your project management, time-tracking, and payment platforms.
• Cost is about value, not just price. Investing in a robust system saves dozens of admin hours each month, directly improving your profit margin.
• Scalability matters. Choose software that can grow with you from a solo founder to a 20-person team without needing a disruptive switch.

Choosing the best accounting software for a social media agency is a foundational business decision. It goes beyond basic bookkeeping. The right system becomes the financial engine for your client work, profitability, and growth.

Many social media agency owners start with spreadsheets or simple apps. This works until you have multiple retainers, need to bill for ad spend, or want to know which client is actually profitable. That's when you need a proper system.

This detailed guide breaks down what to look for. We'll compare the leading options in the UK market. You'll learn how to match software features to your agency's specific needs and workflow.

What makes accounting software 'good' for a social media agency?

The best accounting software for a social media agency automates your unique financial tasks. It handles recurring retainer invoices, tracks billable time against budgets, and separates client ad spend from your service fees. A good system gives you a real-time view of cash flow and project profitability without manual spreadsheets.

Forget software built for shops or contractors. Your agency has different needs. You bill the same clients monthly, often with a mix of fixed fees and variable costs.

You need to track time spent on content creation, community management, and reporting. You also need to record client ad spend you pay for upfront, then invoice them back.

Good agency accounting software makes these processes automatic. It turns complex client financials into simple, actionable reports. This lets you focus on client strategy, not admin.

How do social media agencies use accounting software differently?

Social media agencies use accounting software to manage retainer billing, track billable hours against project scopes, and handle client ad spend reimbursement. The software must provide clear visibility into which clients and services are profitable, which is more complex than tracking simple sales and purchases.

Your primary revenue is likely from monthly retainers. This means creating and sending the same invoice every month, but with potential variations. Software should automate this with recurring invoice templates.

You also need to track time. Your team's hours are your main cost. The software should let you assign hourly rates to staff or tasks. You can then see if the time spent on a £2,000 retainer is costing you £1,500 or £2,500 in wages.

A major differentiator is handling client ad spend. You might pay for Meta or TikTok ads with the agency credit card. Your software must let you code this as a "reimbursable expense" or "cost of sale" for that specific client. Then, you can easily add it to their next invoice.

Without these features, you're constantly manually calculating margins. This leads to errors and profit leaks.

What are the top accounting software options in the UK?

The leading cloud accounting software for agencies in the UK are Xero and QuickBooks Online. Both offer strong core features, excellent bank feeds, and a vast marketplace of third-party integrations specifically useful for agencies, such as time-tracking and project management tools.

Let's compare the two main contenders. Both are cloud-based, meaning you can access them from anywhere. Both connect directly to your UK business bank account for automatic transaction feeds.

Xero is often praised for its clean, modern interface and intuitive design. It's very strong on invoicing and bank reconciliation. Its marketplace of add-on apps is enormous, with many built for creative and marketing agencies.

QuickBooks Online has powerful reporting features and is very popular with accountants. Some users find its project tracking features for time and expenses to be more robust out-of-the-box.

There are other options like FreeAgent (owned by NatWest) or Sage. However, for agency-specific workflows, Xero and QuickBooks Online typically offer the best blend of power, usability, and integration potential. They are the standard for a reason.

Xero vs. QuickBooks: Which is better for agency workflows?

For most social media agencies, Xero has a slight edge due to its superior invoicing automation and wider ecosystem of agency-focused app integrations. QuickBooks Online offers excellent detailed reporting. The best choice often comes down to which interface you prefer and which other tools you need to connect.

Think about your main pain points. Is it creating and chasing invoices? Xero's repeating invoice system and automated payment reminders are excellent.

Is it understanding the profitability of each client campaign? QuickBooks' project feature can track all income and costs (including labour via timesheets) against a single client job.

Consider your other tools. Do you use a specific time-tracking app like Harvest or Clockify? Check which accounting software it integrates with most seamlessly.

Do you use Stripe or GoCardless for direct debit payments? Both platforms connect well with Xero and QuickBooks. The decision is rarely about core accounting. It's about which platform fits into your existing workflow with the least friction.

Many specialist accountants for social media marketing agencies work with both. They can help you set up the one that best matches your operations.

What essential features should you look for?

Essential features for a social media agency include automated recurring invoices, easy time tracking integration, the ability to track and bill reimbursable client expenses (like ad spend), clear project/job profitability reporting, and a user-friendly dashboard that shows cash flow and outstanding invoices at a glance.

Automated Recurring Invoices: You should be able to set up a retainer invoice once. The software then creates and sends it automatically each month. It should also handle automatic payment reminders for late payers.

Time Tracking & Integration: Your software needs to accept data from time-tracking tools. You should see hours logged against specific clients or projects. This data should flow into your profitability reports.

Reimbursable Expense Tracking: This is critical. You need a simple way to record that a £500 Facebook ad spend was for "Client A". The software should then let you mark it up (if applicable) and add it to Client A's next invoice with one click.

Project/Job Profitability Reporting: Can you run a report that shows all income from Client B, minus all costs related to Client B (team time, software subscriptions, ad spend)? This is the only way to know your true client margin.

Clear Dashboard: When you log in, you should instantly see money in the bank, invoices waiting for payment, and bills you need to pay. No digging required.

Why are integrations more important than built-in features?

Integrations are crucial because no single software does everything perfectly. Your accounting system should act as the central financial hub, connecting seamlessly to your time-tracking, project management, payment processing, and CRM tools. This creates an automated workflow that eliminates manual data entry and errors.

You probably already use great tools for specific jobs. Maybe Asana for project management, Harvest for time tracking, and Stripe for payments.

The best accounting software for a social media agency doesn't try to replace these. Instead, it connects to them.

When a team member logs time in Harvest, it should automatically flow into the correct client project in your accounting software. When you raise an invoice in Xero, it should be automatically sent via Stripe, and the payment status should update in Xero when the client pays.

This web of connected tools is what creates efficiency. It removes the need to enter the same data in multiple places. It ensures your financial records are always based on live data from your operations.

Before choosing, check the software's app marketplace. Look for connectors to the other tools that run your agency. This ecosystem is often more valuable than any single built-in feature.

How much should a social media agency pay for accounting software?

Expect to pay between £20 and £60 per month for a capable cloud accounting subscription for a small to mid-sized social media agency. The price typically increases with the number of users or advanced features like multi-currency support. This investment should save you far more in admin time and improved financial control.

Xero and QuickBooks Online have tiered pricing plans. Their starter plans (around £10-£15/month) are often too limited for agencies.

You'll likely need a mid-tier plan. These cost between £24 and £35 per month. They include features like automated recurring invoices, bulk transaction reconciliation, and more detailed reporting.

Don't just pick the cheapest plan. Calculate the cost of your time. If the right software saves you or your team 5 hours of manual admin per month, it has already paid for itself.

Also, factor in the cost of add-on apps. A time-tracking integration might be an extra £8 per month. A advanced reporting tool might be £15. View the total cost of your financial tech stack, not just the core software.

For a growing agency, spending £50-£80 per month on a fully integrated system that delivers accurate, real-time financial data is excellent value. It's a key operational cost.

Can your accounting software help with client reporting?

Yes, good accounting software can directly support client reporting. By accurately tracking time per client and categorising all client-specific expenses (like ad spend), you can easily generate data to show clients the work completed and costs incurred. This adds transparency and can justify your fees or additional scope.

Clients increasingly want to see value. Your financial system can provide the data to demonstrate it.

For example, you can run a report showing that in a given month, your team spent 22 hours on their account across strategy, content creation, and community management. You can show that you managed £2,000 of their ad spend, achieving a specific return.

This isn't about sharing your internal profit margin. It's about showing the volume and type of work delivered. This data comes straight from your time-tracking and expense-categorisation within your accounting software.

This transparency builds trust. It also makes conversations about retainer increases or scope changes much easier. You have clear, factual data on what the current work entails.

What are the common mistakes agencies make when choosing?

The most common mistakes are choosing software that's too simple and won't scale, not planning for integrations, underestimating the importance of user-friendliness for non-accountants, and focusing solely on price instead of time-saving automation. Many agencies also fail to set it up correctly for their specific retainer and project model from the start.

Mistake 1: Using personal or contractor software. Tools like QuickBooks Self-Employed aren't designed for limited companies with multiple clients, employees, and complex invoicing. They will quickly become a bottleneck.

Mistake 2: Ignoring the integration ecosystem. Choosing software that doesn't connect to your other tools creates manual work. This leads to errors and outdated financial records.

Mistake 3: Making it too hard for your team. If it's difficult for staff to submit expenses or log time against projects, they won't do it consistently. Your data will be wrong.

Mistake 4: DIY setup without understanding agency accounting. Setting up your chart of accounts and invoice templates incorrectly from day one creates a mess that's hard to fix later. Getting initial guidance from an expert familiar with agencies is wise.

Avoid these pitfalls by thinking long-term. Choose a system that can grow with you. Plan how it will connect to your other tools. Prioritise ease of use. Consider getting professional help with the initial setup to build a solid foundation.

When is it time to upgrade your accounting system?

It's time to upgrade when you're constantly using spreadsheets alongside your software, spending hours on manual invoicing and reconciliation, can't easily track client profitability, or your team avoids using the system because it's clunky. Growth in client numbers, team size, or service complexity are all clear triggers.

Here are specific signs you've outgrown your current system:

• You have more than 5-10 active retainer clients and invoice manually each month.
• You can't tell which clients are profitable within 5 minutes of looking at a report.
• Tracking billable hours and ad spend for clients involves multiple spreadsheets.
• You've hired your first employee or full-time contractor and need to run payroll.
• You're wasting mental energy worrying about cash flow because you don't have a clear, real-time view.

Upgrading before you hit breaking point is a smart move. It prevents financial chaos during a growth phase. Moving to a proper cloud accounting system like Xero or QuickBooks is a milestone for a serious, scaling agency.

For a comprehensive look at other financial tools, our financial planning template can help you model the impact of this investment.

Choosing the best accounting software for your social media agency is a strategic investment. It's the system that turns operational data into financial clarity. The right choice automates the mundane, highlights what's profitable, and gives you confidence in your numbers.

Start by listing your non-negotiable features, like retainer billing and ad spend tracking. Then, explore how Xero and QuickBooks Online could connect to your existing toolkit. The goal is a seamless flow of information from client work to your financial dashboard.

If this feels daunting, remember that specialist help is available. The right setup saves you time and protects your profitability from day one.