Agency financial health checklist

Track the total value of active retainer contracts. MRR is the foundation of predictable agency revenue.

Monitor revenue from one-time projects. Maintain a pipeline forecast to anticipate future income.

A common guideline is that no single client should be more than 20-25% of revenue. Track the share of your top clients and diversify if it is creeping up.

Divide total revenue by headcount. Track it quarterly; a falling number means headcount is growing faster than revenue.

Track variances. Investigate shortfalls early. Adjust forecasts based on real data.

List every SaaS tool, subscription, and recurring cost. Cancel unused tools. Negotiate annual discounts.

Track outsourced work costs. Ensure margins remain healthy when subcontracting.

Divide total payroll by revenue each month. A rising share points to overstaffing or underpricing.

Review fixed costs quarterly. Consider remote or hybrid to reduce office expenses.

Use accounting software categories consistently. Look for expenses creeping up month over month.

Identify overdue invoices. Follow up on anything past 30 days. Implement late payment policies.

Track how long clients take to pay. Aim for under 30 days. Consider early payment incentives.

Build a cash buffer to handle slow months, late payments, or unexpected costs.

Net 15 or Net 30 terms are standard. Automate payment reminders. Consider requiring deposits.

Project incoming revenue against known expenses. Identify potential shortfalls before they happen.

Revenue minus direct costs (delivery labor, contractors), divided by revenue. Set a target and track it monthly.

Some clients are more profitable than others. Identify which clients generate the best margins.

Compare actual hours and costs to estimates. Learn from overruns to improve future pricing.

Revenue minus all expenses, divided by revenue. Promethean Research reports an average agency net margin of 13% in 2025.

If margins are thin, raise prices or reduce scope. Use data to justify rate increases to clients.

Avoid penalties by paying estimated taxes on time. Work with your accountant to calculate amounts.

Keep receipts and documentation. Use accounting software to categorize transactions throughout the year.

US: payments of $2,000 or more to a contractor made in 2026 need a 1099-NEC (the threshold was $600 for 2025 payments). Send forms by January 31.

Track software subscriptions, home office expenses, travel, professional development, and equipment.

Reduce manual work and improve cash flow predictability. Configure automatic reminders for overdue payments.

Ensure all billable hours are captured and invoiced. Review unbilled time weekly.

Key metrics: MRR, cash balance, AR aging, profit margin, revenue per employee. Review weekly.

Review P&L, cash flow, and key metrics monthly. Include leadership team in the discussion.

Match bank statements to your books. Catch errors and missing transactions before they compound.