Agency operations glossary

An agency operating system is the shared layer where a creative agency's client context, working processes and recurring work live, so capability accrues to the agency rather than to individual chat histories or to an outside consultant.

The percentage of an agency team member’s available hours that are billed to a client — the operating lever behind agency profitability.

A single hourly rate used to bill mixed-seniority work, calculated as the weighted average of the team individual rates.

The forecast of how much billable work the team can realistically deliver in a given period, used to decide what to sell and when to hire.

The profit margin earned on an individual client account, not just the agency average — the number that tells you which clients are worth fighting for.

The average number of days it takes the agency to get paid after invoicing — a direct measure of cash-flow health.

The actual revenue earned per hour of billable work — total fees divided by hours worked — after discounts, overruns, and write-offs.

Revenue minus the direct cost of delivering the work — primarily billable salaries — expressed as a percentage of revenue.

The percentage of billable time that actually gets billed and paid — the leakage between hours worked and hours invoiced.

An ongoing engagement priced on a recurring basis — usually monthly — in exchange for a defined amount of work or capacity.

The gradual expansion of work beyond what the contract priced — extra rounds, new deliverables, "while you are at it" asks — usually unbilled.