By Richie Lennon
At a glance
A useful agency dashboard shows the fees you keep, what it costs to deliver the work, profit and cash. Track the 13 metrics below against a consistent definition, then agree an action when a number moves. Separate pass-through spend from agency fees and distinguish profit from money in the bank. Start with labour, delivery margin, overdue invoices and cash commitments. Add detail when it changes a decision.
Most agency owners know their revenue. Fewer know their economics.
You can win work, keep everyone busy and still struggle to pay yourself. More clients will not fix a delivery model that loses money. You need to know which jobs earn a return, which clients consume the team’s time and how much cash is already spoken for.
We favour one dashboard and a monthly conversation that ends with decisions. If your accountant gives you last year’s profit but cannot explain this month’s delivery margin or next month’s cash pressure, you are missing information you need to run the agency.
Choose the numbers against what you want the agency to deliver: a better income, fewer hours, growth or a future sale. Turn that goal into an annual plan and quarterly targets. The dashboard should tell you whether the business is getting there.
Watch our overview of the financial reports agency owners need.
Profit & Loss – The Big Picture
Start by separating total client billings from agency gross income, or AGI. Here, AGI means billings excluding VAT, less third-party spend passed through to clients. It is the amount left to pay your delivery team, overheads and profit.
This is a management reporting measure. How revenue appears in your statutory accounts depends on whether you act as principal or agent. Agree the treatment with your accountant; do not relabel the accounts just to make a ratio look better.
Consider this illustrative month:
| Item | Amount | Share of AGI |
|---|---|---|
| Client billings, excluding VAT | €100,000 | Not the denominator |
| Pass-through spend | (€20,000) | Not an agency operating cost in this bridge |
| AGI | €80,000 | 100% |
| Direct delivery labour | (€48,000) | 60% |
| Delivery margin | €32,000 | 40% |
| Agency marketing | (€4,000) | 5% |
| Other operating overheads | (€16,000) | 20% |
| Operating profit before interest and tax | €12,000 | 15% |
The same profit is 12% of the €100,000 billings. Neither percentage is wrong. They describe different denominators. Write the denominator beside every ratio so your monthly comparisons mean something.
Include the full cost of employing people, with employer PRSI and benefits. Put owner and director pay somewhere consistent too. If they deliver client work, allocate that time to delivery; if they manage the business, allocate it to overhead. Omitting owner pay makes the agency look more profitable than it is.
The table is an illustration, not an industry benchmark. In our agency work, labour above roughly 65% of client fees is a warning to examine pricing, scope and capacity. The definition matters: delivery labour is different from every salary on the payroll. Use a warning level to start an investigation, not to label an agency good or bad.
List Of Agency Metrics
Keep the same 13 measures below so your dashboard remains familiar. For the first five, use AGI consistently where client billings include significant pass-through spend. If you also show ratios against billed revenue, label both.
1. Revenue
Track earned agency fees as well as invoices raised. A deposit or advance billing is not necessarily revenue earned in that month. Show pass-through billings separately so a large media budget does not disguise flat fee income.
Compare actual fees with budget, last month and the same period last year. Then break the change into new work, price changes and lost clients.
Decision: if fees are up but delivery margin is down, identify whether growth came from lower-margin jobs before adding staff.
2. Labour Cost % Of Revenue
For delivery decisions, calculate direct delivery labour ÷ AGI × 100. In the example, €48,000 ÷ €80,000 gives 60%.
Include delivery salaries, employer costs and delivery freelancers, but do not count a freelancer both here and in pass-through spend. Separately track total payroll if you need to understand the cost of the whole team.
An increase can mean underpricing, unpaid scope, poor scheduling or spare capacity. The number identifies a question; it does not prove which problem you have.
Decision: review the jobs behind the change. Reprice, control scope or redeploy capacity before deciding that hiring is the answer.
Watch our video on labour cost and agency KPIs.
3. Marketing Spend (% of GP)
The heading refers to gross profit. In this dashboard, define that as the delivery margin left after pass-through spend and direct delivery labour. Calculate your agency’s marketing spend ÷ delivery margin × 100.
Our example gives €4,000 ÷ €32,000 = 12.5%. Against AGI, the same spend is 5%. Keep those measures separate: a recommendation expressed as a percentage of fees cannot be compared directly with a percentage of gross profit.
Include the cost of your own marketing here, not media spend you manage for clients. Track the enquiries, suitable opportunities and wins the spending produces alongside the ratio.
Decision: increase spend when the work it brings in earns a return and you can deliver it. A percentage alone is not a reason to spend more.
Watch our video on an agency’s own marketing budget.
4. Operating Expenses (Ex labour ex marketing) % Of Revenue
Calculate other operating overheads ÷ AGI × 100. In the illustration, €16,000 ÷ €80,000 gives 20%.
Include the costs not already counted in delivery labour or marketing: premises, administration, subscriptions and management costs, for example. Where owner or director pay sits depends on their role, but it must appear once in the bridge.
Compare the trend with the operating plan. A new management role can raise overheads before it creates capacity. That is a planned investment if you know what it must achieve.
Decision: give each material new cost an owner, purpose and review date. Remove duplication before cutting something the team needs to deliver work.
5. Net Profit % Of Revenue
Show your actual net profit margin as net profit after interest and tax ÷ earned agency fees × 100. If you also report operating profit before interest and tax, label it separately.
The €12,000 in our table is operating profit before interest and tax, giving a 15% operating margin on AGI. It is not after-tax net profit.
Compare actual profit with budget after including fair pay for the owners’ work. A business that only earns a profit because its owner works unpaid has not yet shown a sustainable return.
Decision: where margin falls, trace the movement through labour, scope, prices and overheads. Do not begin with a blanket cost cut.
Watch our video on agency profit.
6. Utilisation Rate
Calculate time spent on chargeable client delivery ÷ defined available delivery hours × 100. Agree whether the denominator excludes leave and other unavailable time, then apply it consistently.
Suppose the team has 800 available delivery hours and uses 560 on client work. Utilisation is 70%. That does not mean the remaining 240 hours were wasted: some may support training, management or winning work.
Nor does 70% prove that the jobs are profitable. If a €10,000 project takes 150 hours instead of 100, the effective fee falls from €100 to €66.67 per delivery hour, before costs. People can be busy on work that has run beyond its fee.
Decision: look at utilisation with project margin and effective hourly fees. Plan capacity by role rather than demanding the same utilisation from a junior and a team leader.
Price the value of the work, but keep checking the cost of delivering it. A fixed fee does not make delivery hours irrelevant.
For illustration, suppose total agency costs are €50,000 a month. Over 20 working days, that is €2,500 a day across the whole agency. Charging €3,000 gives a 16.7% margin, not 20%. To achieve a 20% margin on that cost, the corresponding daily revenue is €2,500 ÷ 0.8 = €3,125. This is an agency-level cost illustration, not a day rate for one employee; billable capacity must also be allowed for.
7. New Client Acquisition
Count new clients won and the expected agency fees and delivery margin from that work. Define a win consistently, such as a signed engagement with an agreed start date.
A list of new logos can conceal several small, demanding accounts replacing one profitable retainer. Include onboarding time and the capacity needed to service them.
Retainers can make workload and cash easier to plan when the scope, start date, payment terms and cancellation rights are clear. Use signed commitments to plan capacity. A promising pitch is not contracted revenue.
Decision: compare wins with the sales target and delivery plan. Check whether you are replacing lost margin or merely replacing invoice volume.
8. Churn Rate
For a retained-client cohort, calculate clients lost during the period ÷ clients at the start × 100. Losing two of 20 opening clients gives 10% client churn.
Also measure recurring fee income lost. Losing a €10,000 monthly retainer is different from losing a €1,000 retainer, even though each counts as one client. Separate planned project completions from clients leaving an ongoing relationship.
Decision: investigate the reason for losses and their margin impact. Losing an unprofitable client can improve the business; losing your largest profitable account needs a cash and capacity response.
9. Customer Acquisition Cost (CAC)
Calculate sales and marketing acquisition costs ÷ new clients acquired over a defined period. €30,000 spent to win 12 clients gives a CAC of €2,500.
Include relevant people costs and external fees. If sales take several months, review cohorts or a longer period rather than pairing this month’s spending with this month’s wins and pretending the result is precise.
Decision: compare CAC with the contribution those clients generate and how quickly cash comes back. A cheap acquisition is not useful if the work loses money.
10. Lifetime Value (LTV)
Separate revenue LTV from contribution LTV. Average monthly agency fees × retained months estimates revenue value. Multiply that by the appropriate contribution margin to estimate what remains after delivery costs.
A client paying €2,000 a month for 24 months has €48,000 revenue LTV. At a 40% contribution margin, that is €19,200 before acquisition costs and overhead. Subtract a €2,500 CAC and €16,700 remains before overhead and tax.
This is an illustration. Twenty-four months is an assumption, not a promise. Use actual retention patterns and compare service types separately.
Decision: judge an acquisition against the margin and payment history it produces. A high lifetime invoice total does not prove a client is profitable.
11. Average Ticket Value
For a retained-client dashboard, define this as monthly agency fees ÷ active clients in that month. Use project fee per project separately if that is the relevant unit.
€80,000 of monthly fees across 20 active clients gives €4,000 per client. Look at the median and the largest client too. An average can hide many small accounts and one account on which everything depends.
We treat a client above 20% of fee income as a concentration warning, rather than an automatic instruction to turn away work. Losing that client deserves a specific scenario in the cash forecast.
Decision: review low-fee accounts against delivery time and scope. Improve the offer or price where the account cannot support the work required.
12. Accounts Receivable (AR) Ageing
Accounts receivable is money clients owe you. An ageing report groups unpaid invoices by how long they have been outstanding. Use overdue days as well as invoice age so agreed payment terms are clear.
Assign overdue balances to somebody who will act. Disputed work, missing purchase orders and habitual late payment need different responses.
Decision: review collections weekly. Resolve the issue, agree a payment date and reflect realistic receipts in the forecast. Profit on an unpaid invoice cannot fund Friday’s wages.
13. Cash-on-Hand
First separate the bank balance from cash genuinely available. Allow for tax, wages, supplier commitments and other amounts you must pay.
The simple runway formula is available cash ÷ average monthly cash operating outflows. €120,000 available against €40,000 of monthly outflows gives three months. Reversing those figures does not give months of cover.
Our usual planning preference is to build several months of operating cover, often three to four, where the business model permits. The right reserve depends on collections, client concentration and commitments. A runway ratio is a stress view; a dated cash forecast shows when the pressure arrives.
Decision: run the loss of your largest client and a delayed major receipt through the forecast before committing to a hire or distribution.
Watch our video on cash reserves in an agency.
We Give You Numbers That Matter
Use a weekly view for cash and collections, then a monthly view for the economics. Start the meeting with the biggest changes and finish with an action, an owner and a date.
| What changed | What to decide |
|---|---|
| Delivery labour rose while fees stayed flat | Which job, scope or capacity problem explains it? |
| A large client is overdue | Who resolves the issue, and what payment date belongs in the forecast? |
| New wins require another employee | Does the signed margin and collection timing support the commitment? |
The dashboard is useful when it changes those decisions. It should not be another document you receive and never use.
Our agency profitability guide explains the profit bridge in more detail. Our accounting support for marketing agencies connects reporting with the wider finance work.
If your Irish agency turns over €250,000 or more and you want numbers you can use to run it, book a Finance Fit Call.
FAQs
Start with earned fees, direct delivery labour, delivery margin, overdue invoices and cash commitments. Add the remaining measures as the data becomes reliable and the measure changes a decision.
Use a consistent denominator. Where billings include substantial pass-through spend, AGI gives a clearer view of the fees available to fund the team. Label both if you report both.
There is no single rate for every role and agency model. Agree the available-hours definition, then assess utilisation alongside project margin, effective fees and capacity. High utilisation alone does not prove good economics.
No. Operating profit is before financing and tax items. Net profit includes those items. State which measure you are using before comparing margins.
Divide available cash by average monthly cash operating outflows. €120,000 divided by €40,000 gives three months. Use a dated forecast as well, because payment timing can create a shortfall before the average suggests one.
No. Review cash and collections frequently, usually weekly. Review the wider economics monthly and give each material change an action. Reliable, consistent measures are more useful than a larger dashboard nobody trusts.
