Most agencies track two numbers

Revenue and headcount.

Revenue tells you how much money came in. Headcount tells you how many people you're paying. Neither tells you if you're actually running a healthy business.

I ran my agency for three years before I learned what utilization rate meant. Another year before I understood realization. Two more before I started tracking effective bill rate. Each metric I added changed how I made decisions.

Here are seven numbers that matter more than your top-line revenue.

1. Utilization Rate

What it measures: How much of your team's available time goes to billable work. The formula: Billable hours / Available hours Why it matters: A developer who works 40 hours but only logs 25 billable hours has 62.5% utilization. The other 15 hours went somewhere: internal meetings, admin work, bench time, or just not getting tracked. The benchmark: 70-80% for billable staff. Below 65% and you're either overstaffed or your team is drowning in non-billable work. Above 85% and burnout is coming. What most agencies track instead: Nothing. They assume everyone is busy because everyone looks busy.

2. Realization Rate

What it measures: How much of your billable work actually becomes revenue. The formula: Invoiced revenue / (Billable hours × Standard rate) Why it matters: You might track 100 hours at $150/hour. That's $15,000 of potential revenue. But then you write off 10 hours because the project went over budget. You discount another 5 hours to keep the client happy. You realize $12,750. Your realization rate is 85%. The benchmark: 90%+ is healthy. Below 80% means you're giving away too much work, either through write-offs, discounts, or scope creep you don't bill for. What most agencies track instead: Billable hours. Which tells you nothing about whether those hours turned into cash.

3. Effective Bill Rate

What it measures: What you actually earn per hour, accounting for all the leakage. The formula: Total revenue / Total billable hours Why it matters: Your rate card says $150/hour. But your effective rate might be $115. The gap is write-offs, fixed-fee overruns, unbilled change requests, and discounts. The benchmark: Should be within 10-15% of your standard rate. If your effective rate is 30% below your rate card, your pricing or scope management is broken. What most agencies track instead: The rate card number, which is fiction.

4. Unbilled WIP (Work in Progress)

What it measures: Completed work that hasn't been invoiced yet. The formula: (Billable hours not yet invoiced) × Hourly rate Why it matters: High WIP means you're financing your clients' projects with your own cash flow. Work is done, costs are incurred, but money hasn't arrived. I've seen agencies with $200K in WIP wonder why they can't make payroll. The benchmark: Depends on your billing cycle. If you invoice monthly, WIP shouldn't exceed one month of billable work. If you're sitting on 60+ days of unbilled work, your invoicing process is broken. What most agencies track instead: Invoiced revenue. Which ignores the work you've already done but haven't billed.

5. Client Profitability

What it measures: Profit margin on each client account. The formula: (Client revenue - Direct costs) / Client revenue Why it matters: Your biggest client might be your least profitable. That $50K/month account looks great until you realize you're staffing it with three senior developers at $100/hour loaded cost. If the work is billed at $125/hour, your margin is 20%. Your $8K/month retainer client might run at 60% margin. The benchmark: 40-50% gross margin is healthy for most agencies. Below 30% and you're probably losing money after overhead. What most agencies track instead: Revenue per client. Which tells you who pays the most, not who makes you money.

6. AR Aging (Accounts Receivable)

What it measures: How long invoices sit unpaid. The categories:

Current (0-30 days)

31-60 days

61-90 days

90+ days

Why it matters: An invoice at 90+ days has maybe a 50% chance of getting paid. Your "revenue" from three months ago might never arrive. Cash flow problems rarely come from lack of work. They come from slow-paying clients. The benchmark: 80%+ of AR should be current (under 30 days). If more than 10% is over 60 days, you have a collections problem. What most agencies track instead: Total AR. Which doesn't tell you that half of it is dangerously old.

7. Backlog

What it measures: Contracted work not yet started or completed. The formula: Total contracted project value - Revenue recognized Why it matters: Backlog is your near-term revenue visibility. High backlog with low utilization means you're not staffed to deliver. Low backlog with high utilization means you're about to run out of work. Both are problems you want to see coming. The benchmark: 2-3 months of backlog gives you reasonable visibility without overcommitting. Less than 1 month and you're flying blind. More than 6 months and you might be taking on more than you can deliver. What most agencies track instead: Pipeline (potential deals). Which is hope, not committed revenue.

Why You're Probably Not Tracking These

These metrics aren't complicated. The formulas are basic arithmetic. The problem is data.

Utilization requires accurate time tracking. Realization requires connecting time to invoices. Client profitability requires allocating costs to accounts. AR aging requires an actual invoicing system, not sending PDFs from your personal email.

When your time tracking lives in Harvest, your projects live in Asana, and your invoicing lives in QuickBooks, calculating effective bill rate requires exporting three CSVs and 30 minutes in Excel. So you don't do it. You check revenue, check headcount, and assume everything is fine.

It usually isn't.

Start With One

If you're tracking none of these, don't try to track all seven tomorrow. Pick the one that feels most relevant to your current pain:

Struggling with cash flow? Start with AR aging and unbilled WIP.

Projects always going over budget? Start with realization rate.

Not sure if you should hire? Start with utilization.

Some clients feel like more trouble than they're worth? Start with client profitability.

One metric, tracked consistently, will teach you more about your business than a quarterly P&L review.

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Vantage PSA tracks all seven metrics in real-time. No spreadsheets required. See how it works →