A6 terms

• Agency Finance SystemAn agency finance system is the connected set of tools and routines an agency uses to estimate, bill, track and report the money on its work.
• Agency PricingAgency pricing is the way an agency turns its work into a number: by the hour, by the project, by the month or by the value the work creates.
• Agency Pricing ModelAn agency pricing model is the way an agency turns its work into a price, whether by the hour, by the project, by a monthly retainer or by the value the...
• Agency Pricing StrategyAn agency pricing strategy is the set of decisions behind how an agency prices its work: what it charges for, how it charges and what it refuses to compete on.
• Agency Rate CardAn agency rate card is the published list of what an agency charges for its people, services and deliverables, used to scope and budget work before a...
• Agency RatesAgency rates are the unit prices an agency attaches to its people and services, by the hour, the day or the deliverable, from which budgets and proposals...

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B11 terms

• Billable HoursBillable hours are the hours of work an agency can charge to a client, as distinct from the hours it spends running itself.
• Billable Time TrackingBillable time tracking is the practice of logging the hours spent on client work so they can be invoiced, or checked against a fixed fee.
• Billable UtilizationBillable utilization is the share of a person's or a team's working hours that is spent on work a client pays for.
• Billing and InvoicingBilling and invoicing is the process of turning agreed work into a request for payment, and getting that payment in.
• Billing PlanA billing plan is the agreed schedule of when a client pays for a project and how much each payment covers.
• Billing SoftwareBilling software is the application an agency uses to create, send and track invoices and to record the payments that come in against them.
• Billing ToolA billing tool is any application, from a simple invoice generator to a full platform, that helps a freelancer or a creative team record charges and send...
• Budget CreepBudget creep happens when a project's costs rise beyond what was agreed, usually through untracked work, small additions and unclear terms rather than...
• Budget OverrunA budget overrun is when a project costs more than the amount that was approved for it, usually because the scope grew, the estimate was wrong or something...
• Budget ProposalA budget proposal is the document that lays out what a project will cost, line by line, so a client can approve the spend before the work begins.
• BudgetingBudgeting is the process of estimating what a piece of work will cost, deciding how to spend the money, and keeping the spend inside that plan as the work...

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C4 terms

• Calculate Overhead RateTo calculate overhead rate is to work out how much of an agency's indirect costs each hour of billable work has to carry, so that prices cover the...
• CashflowCashflow is the movement of money into and out of a business over time, and the measure of whether it can pay what it owes when it comes due.
• CommissionCommission is a payment calculated as a percentage of a sale or a spend, paid to whoever brought the business or delivered the result.
• Creating a Project BudgetCreating a project budget is the work of turning a scope into a costed plan: every phase, role and expense priced, totaled and approved before the project...

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D1 term

• Define Billable HoursTo define billable hours is to set, in writing, which kinds of work on a client engagement can be charged and which are absorbed by the agency.

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E5 terms

• Employee Utilization ReportAn employee utilization report shows how much of each person's working time went to billable client work over a period, and where the rest of it went.
• End-to-End InvoicingEnd-to-end invoicing is a billing process in which logged time, expenses and milestones flow straight into invoices, payment tracking and the accounts...
• Expense CenterAn expense center is a unit of a business, such as a department, a team or a project, whose costs are tracked together so that spending can be allocated and...
• Expense TrackingExpense tracking is the practice of recording every cost a project or a business incurs, as it happens, against the budget it belongs to.
• ExpensesExpenses are the costs a business incurs to do its work, from the crew on a shoot to the rent on the building, and the first thing revenue has to cover...

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F8 terms

• FeeA fee is the amount an agency charges for its own services, as distinct from the costs it passes through, and the part of a price that pays for the thinking...
• FinanceFinance in a creative agency is the management of the money that moves through the business: what it earns, what it spends, what it owes and what it needs...
• Finance ManagementFinance management is the ongoing work of planning, controlling and reviewing an agency's money, from budgets and payroll to pricing, cash and profit,...
• Financial AccountingFinancial accounting is the recording, summarizing and reporting of a business's transactions in a standard form, so that owners, lenders, investors...
• Financial ForecastingFinancial forecasting is the practice of predicting a business's future revenue, costs and cash from what it knows today, so that decisions are made...
• Financial MarginsFinancial margins are the share of revenue a business keeps at each stage after costs are deducted, expressed as a percentage, and the clearest measure of...
• Financial MetricsFinancial metrics are the numbers an agency tracks to understand how it is performing: revenue, margin, cash, utilization, profitability by project and...
• Forecasting in BusinessForecasting in business is the use of past data, current commitments and informed assumptions to predict what will happen to revenue, costs, demand and...

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G1 term

• Gross ProfitGross profit is revenue minus the direct costs of delivering the work, before overhead, and the first measure of whether an agency's jobs are priced to...

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H1 term

• Hourly RatesAn hourly rate is the price an agency or a freelancer charges for one hour of a person's time, and the unit from which hourly quotes, retainers and...

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I3 terms

• Invoice SoftwareInvoice software is an application that creates, sends and tracks invoices and records the payments against them, so that billing takes minutes instead of...
• InvoicingInvoicing is the process of billing a client for work: deciding what is owed, when, under what terms, and sending a document that gets it paid.
• Invoicing SoftwareInvoicing software is a tool that creates, sends and tracks invoices, automates payment reminders and records what has been paid, so a business gets paid...

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J1 term

• Job CostingJob costing is the accounting method that tracks every hour, expense and overhead charge against a specific project, so a business knows what each job...

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K1 term

• KPI ProfitabilityKPI profitability is the practice of judging an agency's key performance indicators by whether they lead to profit, so that the numbers a team chases...

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M4 terms

• Managerial AccountingManagerial accounting is the internal use of financial information, in whatever form helps, to budget, forecast, price and control costs inside a business.
• MarginMargin is the difference between what a business earns on its work and what that work costs, expressed as a percentage of revenue.
• Monthly RetainerA monthly retainer is a fixed fee paid each month for ongoing access to an agency's time and expertise, instead of pricing each piece of work on its own.
• Music Video BudgetA music video budget is the money set aside to make a video and the line-by-line plan for spending it, from the first shoot day to the last deliverable.

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N1 term

• Net ProfitNet profit is what remains of a business's revenue after every cost has been paid, including overhead, interest and tax, and the truest measure of...

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O6 terms

• On RetainerOn retainer means a client pays an agency a fixed fee each month for ongoing access to its people and its time, instead of commissioning each piece of work...
• OverheadOverhead is every cost of running a business that is not tied to a specific project: rent, software, admin, insurance and the hours nobody can bill.
• Overhead CalculationOverhead calculation is the process of totaling the indirect costs of running a business, such as rent, software, insurance and non-billable salaries, and...
• Overhead CostAn overhead cost is any expense a business incurs to operate that is not tied to a specific client job, from rent and software to the salaries of people who...
• Overhead Costs FormulaThe overhead costs formula divides a business's total indirect costs by its total billable hours to give the overhead each hour of sold work must carry.
• Overhead Rate CalculationOverhead rate calculation is the process of working out how much indirect cost applies to each hour, or each dollar, of billable work, so that an...

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P10 terms

• P&L ReportA P&L report, or profit and loss statement, summarizes a business's revenue, costs and expenses over a period to show whether it made or lost money.
• Partial BillingPartial billing is invoicing a project in stages, at milestones or fixed intervals, instead of one bill at the end.
• Partial InvoiceA partial invoice is a bill for a portion of a project's total, issued when a phase or a milestone is complete rather than waiting for the whole job to...
• PO Number TrackingPO number tracking is the practice of recording a client's purchase order number against every project, estimate and invoice so that work is authorized...
• PO Purchase OrderA purchase order (PO) is a document a client issues to confirm what they are buying, from whom and for how much, and the reference every invoice on the job...
• Prepayment InvoiceA prepayment invoice is an invoice issued before any work is delivered, usually for a deposit or an advance on a project, so the agency is paid for costs it...
• Product Base MarginProduct base margin is the gap between what a product costs to make or buy and what it sells for, before discounts, marketing and overhead are counted.
• ProfitabilityProfitability is how much of a business's revenue it keeps after all costs, measured across the company, a client or a single project, and the plainest...
• Project Budget ManagementProject budget management is the practice of tracking what a creative project is actually costing against what was planned, as it happens, so it stays on...
• Project ProfitabilityProject profitability is the money a single project makes after its direct costs, compared to what the estimate assumed, and the most useful number an...

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R6 terms

• Rate CardA rate card is a published list of an agency's prices for its people, services or deliverables, used to build quotes and set expectations before a...
• Retainer AgreementA retainer agreement is a contract in which a client pays an agency a recurring fee, usually monthly, for an agreed scope of work or a reserved amount of...
• Retainer BillingRetainer billing is the invoicing of a fixed fee on a regular schedule, usually monthly, for an ongoing agency engagement, instead of billing each piece of...
• Retainer PricingRetainer pricing is the practice of setting a fixed recurring fee, usually monthly, for a defined ongoing scope of agency work, rather than pricing each...
• Return on Investment (ROI)Return on investment (ROI) is the gain from a piece of spending expressed as a percentage of what it cost, and the number used to argue that a campaign or a...
• Revenue AnalysisRevenue analysis is the breakdown of a business's income by client, service, project type and period, to understand where the money comes from and...

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T2 terms

• Time and MaterialsTime and materials is a billing model in which the client pays for the actual hours worked at agreed rates plus the actual costs incurred, rather than a...
• Time InvoiceA time invoice is a bill built from hours worked, listing who did what, for how long and at what rate, rather than from a fixed project price.

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U1 term

• Utilization RateUtilization rate is the share of a team's available hours that is billed to clients, the number agencies watch to know whether they are busy or merely...

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