When Revenue Outruns Profit
Budgeting, monthly reporting and client-level costs for a marketing agency
Owner-led marketing agency with a second, consumer revenue line | Fractional CFO: budgeting, monthly reporting and client profitability | 2025 to present
At a glance
65.5% vs. 0.9%
revenue growth against net income growth, January 2026 over January 2025
68.8%
the drop in income from the consumer line over the same period
36.3%
net margin in June 2026, with net income ahead of budget
A tag for every client
client costs coded to the client they serve from September 1, 2026
The situation
The agency’s revenue was shifting from its consumer line to client fees, and the finance side hadn’t kept up:
- the budget file had no 2026 tab
- revenue was tracked by client, but costs weren’t, so the books couldn’t show margin by client
- client costs sat in the agency’s own marketing line
What we did
- Built the 2026 budget and a budget vs. actual report (February 2026); the first report flagged the shift in revenue mix
- Itemized costs coded to the wrong accounts (February 2026)
- Reviewed results against budget every month; the July review set 4 items for rebudgeting
- Moved client marketing costs out of the agency’s own marketing line into new cost-of-sales accounts, with a separate account for client ad spend
- Set up client-level cost tagging (August 2026), with client costs coded to the client they serve from September 1, 2026
- Reset the forecast (October 2026)
What we found
- Growth that didn’t reach profit. January 2026 revenue was up 65.5% on January 2025, but net income was up 0.9%. Income from the consumer line was down 68.8%.
- Monthly results against budget. In June 2026, net income came in ahead of budget, at a 36.3% net margin.
- Costs by client.
- Client marketing now sits in its own cost-of-sales accounts, apart from the agency’s own marketing, with a separate account for client ad spend.
- Since September 1, 2026, client costs have been coded to the client they serve.
- A reset forecast. In October 2026, the Q4 forecast for agency income was cut.
How we measured this: the figures come from the company’s books and its monthly budget vs. actual reports; the engagement has been ongoing since 2025.
What it means
Growth that doesn’t reach profit is a question a budget can raise but not answer. The answer starts with knowing what each client costs to serve.