Profitability Improved by 23%

The Challenge

A 35-person creative agency based in the Northeast was doing $4.2M in annual revenue with 15 active clients. Their P&L showed healthy margins — 18% net profit on paper. But the bank account told a different story: cash was consistently tight, payroll was occasionally stressful, and the partners couldn't figure out where the money was going.

The agency used QuickBooks for accounting and tracked projects in a mix of spreadsheets and project management tools. Nobody had a unified view of which clients were actually profitable when you factored in scope creep, revision rounds, and the hidden cost of senior talent working on junior-priced projects.

What CentSight Found

After connecting QuickBooks and pulling in expense data, CentSight mapped actual costs against revenue by client. The results were eye-opening:

• Three accounts were underwater: The agency's three largest clients by revenue were generating the lowest margins. Scope creep and unlimited revision cycles had eroded profitability to -4%, 2%, and 5% respectively.
• Freelancer costs were untracked: $12K/month in freelance design and development costs weren't being allocated to specific projects, masking the true cost of delivery.
• Utilization was imbalanced: Two senior designers were spending 60% of their time on a single client that was paying mid-tier rates. The opportunity cost was enormous.

The Fix

Armed with data, the agency had honest conversations with all three underperforming accounts. One client agreed to a 30% rate increase after seeing documentation of the actual hours involved. One client moved to a reduced scope that aligned with their budget. One client chose to leave — which actually improved the agency's bottom line.

The agency also implemented project-level cost tracking for freelancers and restructured team allocation to match senior talent with premium clients.

The Impact

Within one quarter, project profitability improved by 23%. The agency recovered an estimated $340K in annual revenue that had been leaking through untracked scope creep and misallocated resources. Cash flow stabilized, and the partners finally had confidence that their biggest clients were also their most profitable.