Agency finance and operations terms, in plain words.

Billable hours

Hours spent on work a client pays for, either directly (time and materials) or because the work is inside a fixed fee or retainer. Non-billable hours are everything else: pitches, internal projects, admin, training. Timesheet software for agencies.

Utilisation

Hours a person spent on billable work divided by the hours they had available, as a percentage. 28 billable hours out of 40 available is 70 percent. Too low and you pay for time nobody sells; too high for weeks on end and quality and people suffer. There is no single right figure; it depends on how much non-billable work you choose to carry. Agency utilisation calculator.

Capacity

The hours a person or team has available in a period, after leave and public holidays. Capacity planning compares those hours with the hours already booked, so you can see who is over 100 percent before the week starts. Resource planning for agencies.

Resource planning

Deciding who does which work given capacity and skills. Capacity planning asks how many hours the team has; resource planning asks whose hours go where. Resource planning for agencies.

Timesheet approval

A manager checks and accepts each person's hours for a period, usually a week, before they are used for billing or payroll. Approved periods are normally locked so the hours cannot change after an invoice has been raised from them. Timesheets with approval and locking.

Non-billable time

Time that no client pays for: pitches, new business, internal projects, admin and training. It is a real cost, so it belongs in your rates, not outside them.

Cost rate (loaded cost per hour)

What an hour of a person costs the agency: salary plus benefits, tools, rent and a share of overheads, divided by the hours they can realistically bill in a year, not the hours they work. Billable rate calculator.

Billable rate (bill rate)

The price per hour you charge a client for a role or a person. It must cover the cost rate plus your target margin; the gap between the two is what pays for non-billable time and profit. Billable rate calculator.

Blended rate

One average hourly rate across a team or project, worked out by weighting each role's rate by its share of the hours. A team billing 10 senior hours at ₹4,000 and 30 junior hours at ₹1,500 has a blended rate of ₹2,125 an hour. Useful for quoting; dangerous if the real mix drifts senior.

Rate card

The agency's published price list: hourly or daily rates by role, and often fixed prices per deliverable, such as a static post or a 30-second reel. Attaching it to the contract is what makes overage billable later. How to build a rate card in India.

Realisation rate

The share of the value of hours worked that you actually bill and collect. If 100 hours at ₹2,000 should be worth ₹2,00,000 and you invoice ₹1,60,000, realisation is 80 percent. The gap is write-offs, discounts and overruns on fixed fees.

Write-off (write-down)

Hours or fees you decide not to bill, in whole (write-off) or in part (write-down), usually because a job overran a fixed fee or a client disputed the time. Every write-off lowers realisation, and a pattern of them points at estimating or scope control.

Margin (gross margin)

Revenue minus the direct cost of delivering it, as a percentage of revenue. A ₹1,00,000 project that costs ₹70,000 in people and freelancers has a 30 percent margin. Project margin uses the cost of the hours logged to that project. Project margin calculator.

Markup vs margin

Markup is profit as a percentage of cost; margin is profit as a percentage of price. Cost ₹70,000 and price ₹1,00,000 is a 43 percent markup but a 30 percent margin. Pricing with a 30 percent markup when you meant a 30 percent margin leaves you short. Agency pricing and margins.

Project profitability

Whether a project makes money once every hour logged to it is costed. Watched live, it lets you act while the project is running rather than at the post-mortem. Project profitability for agencies.

WIP (work in progress)

Work delivered or hours logged that have not been invoiced yet. A growing WIP balance means cash is tied up in finished work, and is often the first sign of a missed invoice. Invoice from timesheets.

SOW (statement of work)

The document that defines what you will deliver for a fee: deliverables, quantities, revision rounds, timelines, assumptions and exclusions. Anything not written in it is open to argument later.

Scope creep

Work that grows beyond the SOW without a matching change in fee: one more reel, a fifth revision round, a new platform. It rarely arrives as one big request, which is why it is best caught by counting delivered work against the allowance as it happens. Margin leak check.

Change order (change request)

A written, priced change to the agreed scope that the client accepts before the extra work starts. It turns scope creep into billable work. Priced change requests in Ancor.

Revision round

One cycle of client feedback and rework on a deliverable. Most SOWs include a fixed number, often two; rounds beyond that are extra work and should be priced. Client approval software.

Fixed fee

One agreed price for a defined scope, whatever the hours. The agency carries the risk of overruns, so the estimate and the scope boundary decide the margin. Estimating agency projects.

Time and materials (T&M)

Billing for the hours actually worked at agreed rates, plus costs. The client carries the overrun risk, so timesheet accuracy is what protects the relationship. Invoice from timesheets.

Milestone billing

Invoicing a fixed-fee project in parts as agreed stages are reached, for example 40 percent at kick-off, 40 percent at first delivery and 20 percent at sign-off. It keeps cash moving on long projects.

Retainer

A recurring monthly fee for an ongoing service. The healthiest kind ties the fee to a countable allowance of deliverables or hours, with an agreed rate for anything above it. Retainer structures in India.

Retainer burn

How much of a retainer's allowance has been used so far in the period, in deliverables, hours or money. Burning 80 percent of the month's allowance by the 15th is the signal to talk to the client before the overrun, not after. Retainer management software.

Rollover

Unused allowance carried into the next period. Rollover should be capped and written into the contract; unlimited rollover becomes a bank of free work the client can draw on later.

Overage

Work delivered beyond the retainer allowance, billed at the overage rate agreed in the contract. Overage drafts in Ancor.

Debtor days (DSO)

The average number of days clients take to pay after you invoice. Rising debtor days with steady revenue means you are funding your clients out of your own working capital.

MSME 45-day rule

Under sections 15 and 16 of the MSMED Act, a buyer must pay a supplier registered on Udyam as a micro or small enterprise within the agreed period and in any event within 45 days of acceptance, or owe compound interest at three times the RBI bank rate. General information, not legal advice. Retainer structures in India.

GST on agency services

Advertising, design, marketing and digital agency services are taxed at 18 percent GST. GST falls due on the invoice date (or the date of an advance, if earlier), not when the client pays. GST and TDS for Indian agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

SAC code

The Services Accounting Code that classifies a service on a GST invoice. Advertising services are SAC 998361; the wider family of professional, technical and business services sits under SAC 9983. GST invoicing for agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

Place of supply

The rule that decides which GST applies. For a registered client it is usually the client's location: a client in your own state means CGST plus SGST (9 percent each); a client in another state means IGST at 18 percent. GST invoicing for agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

CGST, SGST and IGST

The three parts of GST on a domestic invoice. CGST (central) and SGST (state) are charged together on a sale within one state; IGST (integrated) is charged instead on a sale between states. The invoice must show them separately. GST invoicing for agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

Input tax credit (ITC)

The GST a business paid on its purchases, which it can set off against the GST it owes on its sales. A client who claimed credit on your invoice and has not paid you within 180 days must reverse that credit with interest, which is a strong collections lever. GST and TDS for Indian agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

Reverse charge (RCM)

A case where the buyer, not the supplier, pays the GST. A common one for agencies is buying software or services from abroad: a GST-registered Indian buyer generally self-assesses IGST on the import. General information, not tax advice. Rates and thresholds change; check with your CA.

Export of services and LUT

Services to a client outside India can be an export, which is zero-rated, if the conditions are met, including payment in convertible foreign exchange. Filing a Letter of Undertaking (LUT) lets you export without paying IGST up front. GST and TDS for Indian agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

E-invoicing (IRN)

Above a turnover threshold (aggregate turnover over ₹5 crore in any year since 2017-18), B2B invoices must be reported to the Invoice Registration Portal, which returns an Invoice Reference Number (IRN). An unreported invoice above the threshold is not a valid tax invoice. GST invoicing for agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

TDS under section 194J

Tax deducted at source by the client on fees for professional services (10 percent) or technical services (2 percent), calculated on the amount before GST. Some clients classify agency work under 194J; the credit appears in your Form 26AS. GST and TDS for Indian agencies. General information, not tax advice. Rates and thresholds change; check with your CA.

TDS under section 194C

Tax deducted at source on payments under a contract for work, which includes advertising: 1 percent to an individual or HUF and 2 percent to a company or firm, on the amount before GST. CBDT Circular 715 (1995) places advertising agency payments here. GST and TDS for Indian agencies. General information, not tax advice. Rates and thresholds change; check with your CA.