Accounting for creative & digital agencies.

A fixed monthly figure agreed in writing after a 30-minute discovery call. For agencies the drivers are headcount on payroll, the number of freelancers paid each month, transaction volume, VAT scheme and whether you want project-level reporting on top of the compliance work. FreeAgent is included in every package, worth up to £330 a year, though most agencies past a handful of staff end up on Xero — we are a Xero Gold Partner. There is no hourly charge for asking a question.

By costing time against them, which is the thing agencies most often avoid. Revenue per project tells you nothing without the hours behind it: a £30,000 project delivered in 180 hours and one delivered in 340 hours have completely different outcomes and look identical in the profit and loss. You need recorded time — even roughly — against each job, plus freelance and subcontractor cost allocated to it. Most agencies discover that a minority of clients generate the majority of profit, and at least one flagship account is being delivered at a loss.

Yes. They behave completely differently: a retainer is predictable recurring revenue that supports your fixed costs, while project income is lumpy, often collected in advance and delivered over months. Blending them hides the number that actually matters, which is what proportion of your fixed cost base is covered by recurring income before you win anything new. Agencies with high retainer coverage can plan hiring with some confidence; agencies living on projects cannot, however healthy the annual total looks. Reporting them separately takes no extra work if the chart of accounts is set up for it at the start.

Possibly, and it depends on the working arrangement rather than the invoice. A freelancer who works set hours, uses your equipment, is directed like a member of staff and has worked exclusively for you for two years starts to look like an employee to HMRC regardless of what the contract says. If reclassified, the agency picks up the PAYE and National Insurance that should have been deducted, plus interest and penalties. Long-standing regular freelancers are the ones to review, because the relationship drifts over time without anyone deciding it should.

Revenue should be recognised as the work is delivered, not when the invoice is raised or the money arrives. A 50% deposit on a six-month project is cash, not profit — it is deferred income sitting on the balance sheet until earned. Conversely, work delivered but not yet invoiced is accrued income. Agencies that ignore this see a spectacular month followed by three flat ones, and make hiring decisions on the spike. Getting recognition right is what makes monthly figures worth reading.

Yes, and for agencies it usually comes down to four. Utilisation, the proportion of available time that is billable. Revenue per head, which is the fastest read on whether growth is actually working or just adding cost. Gross margin after freelance and direct delivery cost, which is where project profitability really shows. And recurring revenue as a percentage of fixed costs. Those four decide almost everything about whether the next hire is affordable, and none of them appears on a standard profit and loss. We build them into management accounts rather than reporting the software's defaults.