Here’s something we see all the time.
An agency grows from a tunover of £300k or £500k to £750k, maybe it even approaches the £1m turnover level. The team get bigger, the clients get bigger, the work gets more complex. But the finance setup is exactly the same as it was when the founder established it years ago with a bookkeeper, an accountant who does the annual returns and a nagging feeling that there isn’t enough clarity.
Over the past five years, we’ve worked with more than 40 agencies on their finances, with a turnover of £500k to £5m+. When an agency first comes to us, similar problems show up almost every time, not because they are bad businesses, they’re ambitious, talented people running great agencies. The problem is they’ve outgrown their finance setup and nobody’s told them what needs to change.
Here are the seven signs we see most often.
1. Cash flow is managed by checking the bank balance
This is the most common one. There’s no proper cash flow forecast in place and no visibility into what’s coming in and going out over the next 30, 60, or 90 days. Sometimes the founder has their own manual spreadsheet that takes hours to maintain, but it’s not the same as a real forecast.
We recently had a founder say, “I don’t know how it happened, but suddenly I’ve got VAT and corporation tax to pay in the same month. I had what I thought was a healthy bank balance, but it was all an illusion.”
What to do: Start a rolling cash flow forecast, even a simple 8-week view makes a difference. Tools like Float link directly to Xero and cost less than £50 a month. Putting tax liabilities in a separate savings account so they’re never in the “available” pot is another small habit that makes a massive difference.
2. Reports are late, confusing or both
There might be a P&L in Xero. It might even be roughly up to date, but it’s not agency-specific. There’s no budget comparison and by the time anyone looks at it, the month is already ancient history. If reports arrive three or four weeks after the month-end, the agency is managing with old news.
What to do: Aim for management accounts within 7–10 working days of the month-end. That means a P&L, balance sheet and cash flow compared to the budget, with commentary that explains why, not just what, best-in-class agencies close their month in five days.
3. Nobody knows which clients are profitable
Most agencies know which clients are the biggest. They probably know which ones are their favourites. But can they say with confidence which ones make money once the real time spent is factored in? Most can’t.
We regularly find agencies where the biggest client (the one they think is their best) is running at break-even once the overservicing is tracked. One agency we worked with discovered that its largest client was eating into margins because the team was spending 40% more time working on the account than was scoped. The client wasn’t the problem, the lack of visibility was.
What to do: Start tracking time against the scope, even approximately. Look at the recovery rate: is the agency billing for the time being spent? For those who’ve never done this exercise, the results are almost always a surprise. Start with 2-3 projects first and then roll out the process to all future projects.
4. The founder is still doing the finance admin
Running a million-pound agency and spending weekends reconciling the bank account is a sign that something has gone wrong. Invoicing, chasing payments, reconciling, managing payroll tasks are all essential, but it’s not the founder’s job.
We understand it completely, we track our own time at Rocksteady, and we know how precious every hour is. But every hour a founder spends on finance admin is an hour not spent on growth, on clients, on the things that move the business forward.
What to do: Delegate the transactional work. It doesn’t have to be expensive. But it does have to happen. The founder’s time should be on pricing, margins and growth planning, not bank reconciliations or sales invoicing.
5. There’s a bookkeeper and an accountant, but nobody can see the full picture
This is probably the most important one. The agency has finance support in place. A bookkeeper processes the transactions, an accountant files the returns and maybe there’s a payroll provider too, but nobody is looking at the whole picture.
A client pointed this out recently: “There’s no one who sees the company’s financial health in full. No one is in charge of this.” She was right. Her bookkeeper didn’t question the pricing, her accountant didn’t look at utilisation or forecasting and nobody was asking: given these numbers, what should we actually do?
That’s the difference between having finance people and having a finance function. People do separate tasks where as a function connects the data to the decisions.
What to do: The key question is: who in this business is connecting the operational data to strategic decisions? If the answer is “the founder, when they have time” – that’s the gap.
6. Hiring decisions are made on gut feel
The agency is busy, the team is stretched and the obvious answer is to hire. But without a financial model, it’s hard to know when to hire, at what salary, what the breakeven point is, or whether the real issue is utilisation rather than headcount.
We recently built a capacity plan for an agency. They were about to hire a senior designer at £40k. It turned out they could hit £900k with their current team if they managed billing capacity properly, the issue wasn’t headcount – it was utilisation. That one plan saved them £40k.
What to do: Before hiring, understand current utilisation. Is the team at capacity, or is the work poorly distributed? Model the hire: what revenue does this person need to generate, and by when?
7. Revenue is growing but profit isn’t keeping pace
This is the one that stings. An agency hits a million pounds, the founder is proud, and they should be it’s an amazing milestone. But then profitability has dropped to 5%, maybe less. They’re working harder than they were at £600k, managing more people, winning more clients, but the money in their pocket hasn’t changed or it’s gone down.
What’s happened is that costs have scaled faster than profitable revenue. Hiring decisions are made without a model, pricing hasn’t been reviewed recently, overservicing that nobody’s tracking and the value of the business, which is based on profit, not revenue is decreasing.
What to do: Get clear on gross profit margin (should be around 50% for a healthy agency) and net profit margin (target 10–15%). If the agency is below those numbers, something in the cost of sale or the pricing is off. Profit is what rewards the founder and it needs to be rock solid before growth accelerates further.
How many of these sound familiar?
If it’s three or more, that’s not unusual. This is the pattern we see across almost every agency that comes to us. The good news is: all of it is fixable, it just requires the right financial structure and someone to help put it in place.
We’ve built a Finance Health Check that scores agencies across four areas: growth and profitability, team alignment, financial stability and financial confidence. It takes about five minutes to complete and the report includes specific next steps for your agency, click HERE to start your finance journey.
And if any of this sounds familiar, and it would help to talk it through, we’re always happy to have a conversation, just an honest look at where things stand and what the options look like. Click HERE to book a no-obligation discovery call.
