What generated the most profits for your agency last year, and more importantly, what needs improvement? Here are reports that will show what met your profitability goals and what didn't.

Income Statement

For a top line report of your agency’s profitability last year, run an Income Statement. Also known as the Profit and Loss (P&L) statement, its basic equation is Revenues – Expenses = Net Income over a period of time. Break down the revenue by lines of business and expenses by type (such as payroll, operating expenses and overhead) for more details. If you establish agency goals for revenue and expenses, you’ll have a benchmark for comparison.

Client and Job Profitability

After determining your agency’s overall profitability last year, break it down by client. Take the percentage of your adjusted gross income each client represents. Because you are investing time and resources into each client, it is smart to track the rate of that investment. Consider the time spent on each client (see more about this under Realization). If some have a much lower profit margin when you consider the amount of time employees must spend to maintain them, it may suggest a need for higher rates or a retainer for the client. For more details, break it down by job. Are the results less than expected? You may be underbidding. This may also be a symptom of needing to streamline your agency process.

Employee Utilization, Productivity, and Realization

Most business types need to know how employees are spending their time to set rates and determine if they are over or understaffed. The Employee Utilization report shows the percentage of a staff member’s available time spent on billable projects. For example, if an employee had 180 eligible hours in one month and spent 90 hours on billable projects, their utilization rate is 50%. For further details, look at the productivity of each employee by comparing their billable hours goal to actual time spent on billable jobs. For Realization, include billed amounts to show time against fees and commissions.

Pulling data for year-end reports can be time consuming. But it doesn’t have to be.

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Find out how Advantage can help you by contacting us for a complimentary demo or discussion about your unique needs.