diff --git a/src/routes/admin.test.ts b/src/routes/admin.test.ts
index 33061383..57da799b 100644
--- a/src/routes/admin.test.ts
+++ b/src/routes/admin.test.ts
@@ -4,7 +4,7 @@ import supertest from 'supertest';
 import express, { Request, Response, NextFunction } from 'express';
 import path from 'node:path';
 import fs from 'node:fs/promises';
-import adminRouter from './admin';
+import adminRouter from './admin'; // Correctly imported
 import * as db from '../services/db';
 import { UserProfile } from '../types';
 
@@ -378,6 +378,18 @@ describe('Admin Routes (/api/admin)', () => {
         await fs.unlink(dummyFilePath);
       });
 
+      // Add a cleanup hook to remove the file created on the server by multer
+      afterAll(async () => {
+        const uploadDir = path.resolve(__dirname, '../../../flyer-images');
+        try {
+          const files = await fs.readdir(uploadDir);
+          const testFiles = files.filter(f => f.startsWith('logoImage-'));
+          for (const file of testFiles) {
+            await fs.unlink(path.join(uploadDir, file));
+          }
+        } catch (error) { console.error('Error during admin test file cleanup:', error); }
+      });
+
       it('should return a 400 error if no logo image is provided', async () => {
         // Arrange
         const brandId = 56;
diff --git a/src/routes/admin.ts b/src/routes/admin.ts
index 1b32411d..3b095c02 100644
--- a/src/routes/admin.ts
+++ b/src/routes/admin.ts
@@ -18,7 +18,7 @@ import { flyerQueue, emailQueue, analyticsQueue } from '../services/queueService
 const router = Router();
 
 // --- Multer Configuration for File Uploads ---
-const storagePath = process.env.STORAGE_PATH || '/var/www/flyer-crawler.projectium.com/assets';
+const storagePath = process.env.STORAGE_PATH || '/var/www/flyer-crawler.projectium.com/flyer-images';
 const storage = multer.diskStorage({
     destination: function (req, file, cb) {
         cb(null, storagePath);
diff --git a/src/tests/integration/ai.integration.test.ts b/src/tests/integration/ai.integration.test.ts
index 2eaf5dbd..f2db5780 100644
--- a/src/tests/integration/ai.integration.test.ts
+++ b/src/tests/integration/ai.integration.test.ts
@@ -1,7 +1,9 @@
 // src/tests/integration/ai.integration.test.ts
-import { describe, it, expect, beforeAll } from 'vitest';
+import { describe, it, expect, beforeAll, afterAll } from 'vitest';
 import * as apiClient from '../../services/apiClient';
 import * as aiApiClient from '../../services/aiApiClient';
+import fs from 'fs/promises';
+import path from 'path';
 
 /**
  * @vitest-environment node
@@ -32,6 +34,21 @@ describe('AI API Routes Integration Tests', () => {
     authToken = loginToken;
   });
 
+  afterAll(async () => {
+    // Clean up any files created in the flyer-images directory during these tests.
+    const uploadDir = path.resolve(__dirname, '../../../flyer-images');
+    try {
+      const files = await fs.readdir(uploadDir);
+      // Target files created by the 'image' and 'images' multer instances.
+      const testFiles = files.filter(f => f.startsWith('image-') || f.startsWith('images-'));
+      for (const file of testFiles) {
+        await fs.unlink(path.join(uploadDir, file));
+      }
+    } catch (error) {
+      console.error('Error during AI integration test file cleanup:', error);
+    }
+  });
+
   it('POST /api/ai/check-flyer should return a boolean', async () => {
     const mockImageFile = new File(['content'], 'test.jpg', { type: 'image/jpeg' });
     const response = await aiApiClient.isImageAFlyer(mockImageFile, authToken);
diff --git a/src/tests/integration/flyer-processing.integration.test.ts b/src/tests/integration/flyer-processing.integration.test.ts
index 308eab41..c4a636e3 100644
--- a/src/tests/integration/flyer-processing.integration.test.ts
+++ b/src/tests/integration/flyer-processing.integration.test.ts
@@ -1,6 +1,6 @@
 // src/tests/integration/flyer-processing.integration.test.ts
 import { describe, it, expect, beforeAll, afterAll } from 'vitest';
-import fs from 'fs';
+import fs from 'fs/promises';
 import path from 'path';
 import * as apiClient from '../../services/apiClient';
 import * as aiApiClient from '../../services/aiApiClient';
@@ -46,6 +46,21 @@ describe('Flyer Processing Background Job Integration Test', () => {
     if (createdUserIds.length > 0) {
       await getPool().query('DELETE FROM public.users WHERE user_id = ANY($1::uuid[])', [createdUserIds]);
     }
+
+    // Clean up any files created in the flyer-images directory during tests.
+    const uploadDir = path.resolve(__dirname, '../../../flyer-images');
+    try {
+      const files = await fs.readdir(uploadDir);
+      // Use a more specific filter to only target files created by this test suite.
+      const testFiles = files.filter(f => f.includes('test-flyer-image'));
+      for (const file of testFiles) {
+        await fs.unlink(path.join(uploadDir, file));
+        // Also try to remove from the icons subdirectory
+        await fs.unlink(path.join(uploadDir, 'icons', `icon-${file}`)).catch(() => {});
+      }
+    } catch (error) {
+      console.error('Error during test file cleanup:', error);
+    }
   });
 
   /**
@@ -55,7 +70,7 @@ describe('Flyer Processing Background Job Integration Test', () => {
   const runBackgroundProcessingTest = async (user?: User, token?: string) => {
     // Arrange: Load a mock flyer PDF.
     const imagePath = path.resolve(__dirname, '../assets/test-flyer-image.jpg');
-    const imageBuffer = fs.readFileSync(imagePath);
+    const imageBuffer = await fs.readFile(imagePath);
     const mockImageFile = new File([imageBuffer], 'test-flyer-image.jpg', { type: 'image/jpeg' });
     const checksum = await generateFileChecksum(mockImageFile);
 
diff --git a/src/utils/imageProcessor.ts b/src/utils/imageProcessor.ts
index 20197174..cfb11e06 100644
--- a/src/utils/imageProcessor.ts
+++ b/src/utils/imageProcessor.ts
@@ -13,16 +13,24 @@ import { logger } from '../services/logger.server';
  */
 export async function generateFlyerIcon(sourceImagePath: string, iconsDirectory: string): Promise<string> {
   try {
-    const originalFileName = path.basename(sourceImagePath);
-    const iconFileName = `icon-${originalFileName}`;
+    // 1. Create a new filename, standardizing the extension to .webp for consistency and performance.
+    // We parse the original filename to remove its extension before adding the new one.
+    const originalFileName = path.basename(sourceImagePath, path.extname(sourceImagePath));
+    const iconFileName = `icon-${originalFileName}.webp`;
     const iconOutputPath = path.join(iconsDirectory, iconFileName);
 
     // Ensure the icons subdirectory exists.
     await fs.mkdir(iconsDirectory, { recursive: true });
 
-    // Use sharp to resize the image to 64x64.
+    // 2. Use sharp to process the image.
     await sharp(sourceImagePath)
-      .resize(64, 64)
+      // Use `resize` with a `fit` strategy to prevent distortion.
+      // `sharp.fit.cover` will resize to fill 64x64 and crop any excess,
+      // ensuring the icon is always a non-distorted square.
+      .resize(64, 64, { fit: sharp.fit.cover })
+      // 3. Convert the output to WebP format.
+      // The `quality` option is a good balance between size and clarity.
+      .webp({ quality: 80 })
       .toFile(iconOutputPath);
 
     logger.info(`Generated 64x64 icon: ${iconFileName}`);