A question the owner cannot answer
The agency is busy. Everyone is at capacity, the pipeline is decent and the bank balance is fine but never as comfortable as it should be. The owner suspects two or three retainers are dragging margin down, has a feeling which ones, and cannot prove it.
To find out, someone exports invoices from Xero, exports time from the tracker, looks up salaries, guesses at overheads and builds a spreadsheet over a weekend. It gives an answer for one quarter. By the time the next quarter comes round, nobody wants to do it again, and the spreadsheet has already drifted from reality because two people changed roles.
Why the numbers never meet
The data exists. It is just stored in shapes that do not line up.
- Invoices in the accounts package are raised per client, but one invoice can mix the retainer fee, a one-off project, media rebilling and freelancer recharges.
- The time tracker records hours per person and project, with a billable rate that is often a notional number, not a cost.
- Salary and cost rates sit with the owner or the bookkeeper and are not shared with the team, for good reason.
- Freelancer invoices are coded to a cost account, not to the client they worked for.
- Retainers start mid-month, pause, change scope and roll over, so a simple fee divided by hours gives the wrong answer.
An agency can run for years with every system correct on its own terms and still have no reliable number for what each client is worth.
What guessing costs you
Without a per-client figure, renewals get priced on instinct. Retainers that should go up stay flat because the client is pleasant and the account manager is worried about losing them. Retainers that are profitable get discounted to win the renewal. Staff are hired to cover busy accounts without checking whether those accounts pay for the extra person.
The biggest cost is at the point of decision. When a large client asks for more for the same fee, the owner has to answer without knowing what the current arrangement earns.
How we join fees, time and cost
- We read invoices and credit notes from Xero or QuickBooks through their APIs and split each line by type: retainer fee, project fee, media, rechargeable cost.
- We read time entries from your tracker, such as Harvest, Productive or your project system, per person, client and job.
- Cost rates per person are held in a restricted table only the owner and finance can see. The monthly view shows cost totals, not individual salaries.
- Freelancer bills are matched to the client they relate to, using the job reference or a short coding step when a bill arrives.
- Retainer months are handled properly: part months, paused months and rollover hours are allocated to the month the work belongs to.
- The result is a monthly table per client with fee, cost of time, direct costs and contribution, plus a trend over the last few quarters.
| Figure per client | Where it comes from |
|---|---|
| Retainer and project fees | Accounts package invoices, split by line type |
| Hours by person | Your time tracker |
| Cost of those hours | Restricted cost rate table |
| Freelancer and third-party costs | Supplier bills matched to the client |
| Contribution | Fees less the three above |
How you load overheads is your decision and your accountant's. We make the method a setting rather than a formula buried in a spreadsheet.
What the monthly view is used for
At the start of each month the owner opens one page and sees the clients sorted by contribution, with the ones that moved most flagged. Account leads see their own clients without anyone's salary. Before a renewal meeting, the account lead can see the last year of hours against the fee and walk in with a proposal based on what the client actually uses.
Hiring decisions change too. If the design team is stretched, the view shows which clients are using that time and whether they are paying for it.
Is this where your agency is?
- You know the agency's overall margin but not the margin per retainer.
- Client profitability is a spreadsheet someone built once and never updated.
- Freelancer costs are not tied back to the client they worked for.
- Renewals are priced on how the relationship feels.
- You suspect some accounts lose money but cannot show it.