Agency management with Clockify

Clockify is time tracking software for keeping track of billable and non-billable employee hours. It helps you with manage team hours, plan projects, track progress, run reports, and bill your clients.

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How to measure the success of your agency?

The most common performance metric for any agency is its utilization rate.

The term ‘utilization’ refers to the effective use of resources, and it demonstrates profitability.

A utilization rate shows the percentage of billable hours compared to the total number of available hours employees have at their disposal.

Insights on utilization rates help you realize which departments/people are oriented towards:

non-profitable activities (lower than the optimal utilization rate) – necessary, but non-billable tasks;
profitable activities (higher than the optimal utilization rates, or close to 100%) – you might need to consider hiring new people.

The most common formula for calculating the utilization rate is:

Utilization rate (%) = Total Billable Hours / Total Available Hours * 100

The ideal/optimal utilization rate for agencies is usually around 85% to 90%. But, it depends on what’s the ideal situation for you.

Your ideal utilization rate should enable the right balance between billable tasks and non-billable tasks.

For example, when working on a new project with a new client, your team might need a few extra hours for non-billable activities: research, client meetings, etc.

But, if you take on similar projects from the same client, the majority of your team’s time will be dedicated towards billable tasks – resulting in a higher utilization rate.

So, an ideal utilization rate will vary from project to project. But it should always ensure your agency stays profitable.

How to ensure your agency stays profitable?

Before starting a new project, a good set of pre-defined rules will affect the whole process, a client-agency relationship, your utilization rate – and consequently your profit.

When acquiring a new project, the first thing to do is to establish a workflow with a client. Both sides need to agree on:

The deadline,
The budget,
Which tasks can be billed and which won’t,
The final result or measurable milestones,
The frequency of verbal/written checkpoints.

To ensure each aspect of the established workflow will be implemented, it is recommended to tie it all up to the one place where the actual work gets done.

Keep in mind that a 100% utilization rate is not feasible or desirable. But, a slight increase will result in increased profitability.

How to use Clockify to increase utilization rates?

Let’s imagine you got a new project. This is what your typical workflow would look like.

Add a new client to your database

Your projects are tied to your clients. So when you’re working on a specific task, your work has to be connected to a client.

In the base of your clients, each will have a name, contact information, an address for invoicing, as well as any other specific details you might need to note.

A list of clients in Clockify, with their names and addresses. — The final client database with the most important information – name, contact, address, and notes.

2. Split your project into tasks

To measure your utilization rate, the first thing you need to do is simply establish the work that will impact it, so the basic step would be to – create a project.

Information needed to type in to create a new project in Clockify: name, color, public/private status, client. — *Creating a new project in Clockify.*

In Clockify, each project has a name, a client, and a color assigned to it to visually separate projects from each other.

A list of projects with their clients, tracked time, budget, progress bar, and access setting. — *The final project database list.*

Projects can be difficult to predict, but dividing them into smaller tasks is the first step toward tackling them.

A list of tasks for a project, with billability status, billable and cost rates, and assignee information. — *Project Stella has 3 tasks, each with its own billable and cost rate. The Research is a mandatory task. However, it is not billable.*

As your team begins to track time on each of these tasks, you will be able to follow the progress.

Tracked time logs on project tasks. — *Tracked tasks so far (non-billable tasks).*

To keep track of the progress for each task or a project as a whole, you can set time and budget estimates, but also forecast how the rest of the project will evolve.

Project's progress tracking tab, with estimates for time and budget, tracked time, and recorded expenses. — *The progress made on Project Stella. So far, all recorded tasks are non-billable.*

Forecasting and progress tracking will enable you to plan ahead when accepting new projects.

Forecasting tab on a project, to visually track if a project will go over an estimate. — *Forecast alerts that Project Stella will go over the estimate/deadline by 17.5 hours – based on the current schedule and set estimates.*

A full focus on tasks can sometimes get you to lose sight of the budget and deadline, so you have to find a way to keep everyone aware of the overall progress.

One of the ways in which you can do this is to set alerts in Clockify, which will notify certain team members whenever a project reaches a certain percentage of its estimated time.

If you continuously work on similar projects, it would be useful to save projects as templates and save yourself some time on creating tasks, estimates, assigned teams, billable rates, or any other custom fields.

Then you will have the opportunity to spend more time working on billable tasks.

Setting up a project as a template. — *Saving Project Stella as a Template.*

Creating a new project from a template. — *Creating a new project from the Project Stella template.*

3. Organize people and assign roles

Resource management is of utmost importance, especially in agencies. Whenever you get a new project, the first thing you will think about is which team members will work on it.

Start from determining the overall number of people needed to complete the project, making sure you don’t overburden your team and stay within the budget.

You need to set billable and cost rates for each person working on a project because that will be the basis for billing your services.

Listed team members with their email addresses, roles, and billable and cost rates. — *All team members with their own cost and billable rates.*

Also, you need to define who will be the main responsible for each part of the project, and delegate some parts of the process to the main responsible team members.

Assigning a team member a Project Manager role. Other roles available are Admin and Team Manager. — *Assign roles to team members to delegate some parts of the process.*

4. Effectively distribute employee time

Effective distribution of employee time will cut down the time you need to complete projects with different deadlines.

Since complex information is much easier to manage when represented visually than as written text, visualization is an important part of project management.

When scheduling team members and organizing them per project, you need to have a visual overview of:

How many hours you dedicated to each project;
Which team members are working on which projects, and for how long.

Scheduling team members on a project. — *Project Stella is assigned to three team members each day of the week, except on weekends.*
*When a project has assignees, it will be underlined.*

If, for example, someone from your team needs time off, you will need to reorganize your team and reschedule their task responsibilities.

For that reason, you always need to know the working capacity of the whole team and each member.

The capacity of your team is calculated based on the time-tracking targets you set on a daily, weekly, or monthly basis.

Setting up a time tracking target for particular team members, on a daily or weekly basis. — *The time-tracking target for the day is a minimum of 7 hours. All team members will be notified if they track less than 7 hours, and more than 8 hours.*

Based on the time tracking targets you set for each person or team, you will know who is booked to their full capacity, and who has free hours.

Assigning projects to team members based on their work capacity - who has free hours, who is overbooked, and who is fully booked. — *Team availability across days.*

5. Track billable and non-billable tasks

Once your project is split into tasks, and you decided on the team members to be included, the next step is to provide them with the right time-tracking system.

However you choose to track your time, you need to differentiate between billable and non-billable tasks, to later invoice your clients accordingly.

After you agree with a client on what will be billable and what won’t, your team can then proceed to track the time spent on billable or non-billable tasks.

A list of tracked billable and non-billable tasks. — *Billable tasks are marked with a blue $ sign. Non-billable tasks are with a gray $ sign.*

6. Track expenses

Working on a project sometimes requires additional expenses you have to bill, too.

For example, let’s say your client would like to meet in person with the whole team to have an in-person meeting before starting the project.

If that’s not your usual practice – the cost of that trip will probably be something you can charge for.

Clockify lets you record all your expenses which can later be included in an invoice you send to clients.

A recorded expense on a project. — *Example: Mileage expenses for a business trip to a client’s site.*

7. Manage invoices and bill clients

After you’ve done the work, it’s time to send an invoice out to your client.

The following details are a usual part of an invoice you should share with a client:

Your company information
Services provided
Additional expenses
Date range
Taxes
Discounts
Issue date
Due date
Client information

An invoice with tracked billable time and recorded expenses ready to bill a client. — *The first invoice we created for the Feeney PLC client, with billable tasks and the additional expense for the business trip.*

To make sure you manage all the invoices properly and don’t accidentally double-bill clients, you can manage their status (sent/paid/void/unsent) in the invoice list.

A list of invoices with distinct statuses - paid/sent/unsent. — *The list of your invoices.*

8. Sum up your work on the project

Having an overview of which team or team member generates which amount of costs and profit gives guidance on optimal resource allocation.

Real-time reporting helps you realize whether you need to change something mid-project, to stay within the deadline, or a budget, and gives you insights on how to organize your team for future projects.

Ideally, when summarizing work on a project, reports should show the tracked time for each user, along with:

the profit they earned (based on the billable rate), and
the costs associated with their work (based on the cost rate).

Summary report for a project, with visual graphs of tracked hours, gained profit and labor cost. — *Sum up the work you’ve done for a client or a project. Filter to see the data you need.*

Keeping clients informed of all the work done so far can be represented through Detailed reports.

Detailed report for each recorded task on a project, the user who logged it and the duration. — *Detailed log of all the work done on Project Stella.*

If, for example, you are charging a retainer fee for some clients, it’s good to know how many hours you have used from the total billable hours of the project.

In Clockify, you can filter the tracked billable and non-billable hours, choose the client and the project you are referring to, and display estimates to compare tracked hours with the total number of hours.

Filtering information in a summary report. — *Filter between billable hours, non-billable hours, and total estimated time to update your clients and regulate retainer payments.*

Clients can have up-to-date information if you share a public link to your report. Just filter the data you want to show them and click on the share button to generate a public link.

Sharing a report to people outside of your organization. — *Live link to follow progress on the project.*

Track your agency workflow through Clockify

Clockify lets you follow each phase of your work on projects from one place. From concept making to project billing – onboard and easily manage multiple projects at once.

Find out which Clockify features are most useful for your agency by exploring our entire feature list.