Marketing agencies
Monthly financial reporting for marketing agencies
An agency's monthly reporting package is only useful if it starts from net revenue: gross billings minus the media and other costs passed straight through to clients. Every agency ratio that matters, gross margin, staff cost ratio and profit margin, is measured against net revenue, not billings.
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Every figure shown here is invented for illustration. Nothing on this page is computed from anyone’s accounts.
The seven measures an agency package should show
| Measure | Formula | Why it matters |
|---|---|---|
| Net revenue | Gross billings − pass-through media costs | The revenue the agency actually earns |
| Gross margin % | (Net revenue − freelancers − production) ÷ net revenue | Delivery efficiency before overheads |
| Staff cost ratio | (Salaries + payroll taxes + benefits) ÷ net revenue | The main driver of agency profit |
| Retainer share | Retainer revenue ÷ net revenue | How predictable next quarter is |
| Operating margin | Operating profit ÷ net revenue | What is left after everyone is paid |
| DSO, debtor days | Accounts receivable ÷ gross billings × days | How long clients take to pay, media included |
| Media payables cover | Cash ÷ media payables | Whether the platforms can be paid before clients pay |
What Magic MIS computes, and what you work out from its ledgers
Magic MIS computes on billings, as the books record them. With rebilled media placed in revenue and media costs in direct costs, its gross profit is already billings less media, freelancers and production, and it computes DSO, staff costs, EBITDA and cash every month. Net revenue itself, and the ratios measured against it, take one subtraction from the media ledgers behind revenue and direct costs.
Four mapping traps in an agency's books
- Pass-through media isn't the agency's revenue. Keep media rebilled and media costs on their own ledgers so net revenue can be worked out; mixed in, gross margin looks tiny and staff ratios look great.
- Unbilled and deferred revenue often sit side by side in the chart of accounts: work done but not billed is an asset, retainers billed in advance a liability.
- Freelancers and salaries. Freelancers usually belong in the cost of delivery, permanent staff in overheads. Pick one rule and keep it every month.
- Company cards. Ad spend paid on a card must reach the right expense ledger before the trial balance is exported.
Brightwire Media, an invented agency, earns $1.84 million of $2.74 million billed
From the agency's trial balance over the six months to June 2026, worked by hand:
| Measure | Working | Result |
|---|---|---|
| Gross billings | Retainers 1,184,000 + projects 642,500 + media rebilled 918,300 | $2,744,800 |
| Net revenue | 2,744,800 − media costs 902,750 | $1,842,050 |
| Retainer share | 1,184,000 ÷ 1,842,050 | 64.3% |
| Staff cost ratio | 1,057,560 ÷ 1,842,050 | 57.4% |
| Gross margin | (1,842,050 − freelancers 286,400 − production 94,320) ÷ 1,842,050 | 79.3% |
The board works gross margin on billings, with media in direct costs, so for the six months it reads 53.2%; on net revenue it is the 79.3% here. Media payables of $211,600 are close to the $214,380 at the bank, so client collections need to stay on 30-day terms.
In Magic MIS, the same books loaded a month at a time give this board for June 2026:
Magic MIS wrote these section of the commentary for June 2026, word for word. The AI wrote the sentences; the engine filled every figure, and each one opens to its ledgers on the board:
Performance
Revenue from operations for Jun 2026 was $487,075.97, a change of $(7,921.62) (-1.6%) on last month.
EBITDA was $42,038.21, a change of $(21,728.32) (-34.1%) on last month. Profit before tax was $40,404.88 and profit after tax was $40,404.88, each a change of $(21,728.31) (-35.0%) on last month.
From the trial balance to the agency package
- Export the trial balance from QuickBooks, Xero or your system as Excel, CSV or PDF. There is no live connection.
- Upload it. Each ledger is placed once on a line of the report, by rules first and the AI only for what the rules can't place; check the media lines on the ledger map.
- Get a checked Excel workbook with live formulas, a board you change by chatting, and the month written up.
- Next month, upload the new trial balance: the placing is remembered, so it is a refresh, not a rebuild.
Click any figure on the board to see its working, the month and the ledgers behind it. It is prepaid credits with no subscription, and every action shows its price before it runs; see the credit packs.
What agencies ask before they upload
Can Magic MIS separate pass-through media from revenue?
Keep media rebilled and media costs on ledgers of their own: the board's gross profit is then billings less media, and net revenue is one subtraction from those ledgers.
We bill clients in different currencies. Is that a problem?
Each company is reported in the currency its books are kept in. Figures are labelled, never converted.
Does it do utilisation?
Utilisation needs timesheet data, which isn't in a trial balance. The staff cost ratio comes straight from it.
Can I share the board with the agency's owner?
Yes, as a read-only link that opens on a phone and that you can withdraw at any time. Magic MIS itself works in a desktop browser.
Read next
- Monthly financial reporting software for small businesses and their CPAsMonth-end reporting from your accounting system's trial balance: P&L with year to date, balance sheet, KPIs, A/R and A/P aging and commentary, in an Excel workbook you can audit.Read
- How do you calculate staff cost as a percentage of fee income?Staff cost ratio = staff costs ÷ fee income × 100. What counts as a staff cost, a worked example, typical ranges for people businesses, and the traps in the ledgers.Read
- AI variance analysis: flux commentary written from computed figuresWhich movements matter and why, not every change: month-over-month variances computed from your trial balance, filtered by materiality and written up, every figure traceable.Read
Build your agency's monthly package from its trial balance
Create an account, load last month's trial balance, and get the report — paid per action.
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