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5 Financial KPIs Every Agency Should Track
To build a successful, scalable agency, you need more than just great creative work - you need clear visibility over your financial performance.
Tracking the right financial indicators helps agencies improve profitability, manage growth, and avoid unexpected cash flow problems.
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Here are the five key KPIs every agency should be monitoring.
Gross Profit Margin
Why it matters:
Your gross profit margin shows how efficiently your agency delivers client work after accounting for direct csosts (such as freelancer costs, media spend, or project specific expenses).
How to calculate it:
(Revenue - Direct Costs) / Revenue x 100
What to watch for:
A falling margin could signal under-pricing, project overruns, or rising costs of delivering projects.
Utilisation Rate
Why it matters:
Utilisation measures how much of your team's available time is spent on revenue-generating client work versus non-billable activities.
How to calculate it:
Billable Hours / Total Available Hours x 100
What to watch for
Low utilisation means your team may be underused, while extremely high utilisation could lead to burnout and quality issues.
Revenue per Employee
Why it matters:
This KPI indicates how much revenue each team member generates, helping you assess team productivity and scalability.
How to calculate it:
Total Revenue / Number of Employees
Watch to watch for:
Monitoring trends over time shows whether hiring, workload, and revenue are balances correctly.
Client Profitability
Why it matters:
Not all clients contribute equally to your agency's bottom line. Knowing which accounts are profitable helps you focus on the right relationships.
How to calculate it:
Analyse revenue minus the direct costs associated with servicing each client.
Watch to watch for:
Regularly reviewing client profitability ensures you avoid hidden losses on demanding or under-priced accounts.
Project Forecast Accuracy
Why it matters:
Accurate project forecasting helps your agency plan resources, timelines, and budgets more effectively - ensuring you deliver projects profitability and on time.
How to calculate it:
At the end of each project, prepare an actual vs budget profit & loss report. Set a variance limit for all projects and scrutinise any variances which exceed the limit.
Watch to watch for:
Significant differences between forecast and actual project outcomes can highlight issues like under-scoping, poor resource planning, or scope creep - all of which can seriously impact profitability.
Ready to Gain Deeper Financial Insights into Your Agency?
Better financial visibility means better decisions - and a stronger, more sustainable agency.​
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Contact us today to find out how we can help your agency scale with smarter financial management.
If you would like a PDF version of this document, please drop us an email and we will be happy to send you a copy.