Agency Revenue Forecasting

Agency Revenue Forecasting: Going Back to Basics

We share tips to build an agency revenue forecasting process that predicts financial outcomes but also establishes a foundation for accountability around revenue goals.

For marketing and communications agencies, effective revenue forecasting is crucial. Over the years, we’ve witnessed various agency revenue forecasting workflows, often complicated by an excess of features in management systems.  

We helped FMCG creatives, Kinetic Agency create one centralized ERP solution to gain greater visibility across all aspects of their operations and improve financial forecasting. The Kinetic Agency case study demonstrates our three golden rules for building a robust agency forecasting process. 

The Golden Rules for Your Agency’s Revenue Forecasting

1. Clarify Revenue Recognition Methods: Work in Progress (WIP) or Billed?

It’s important to set out if you’re recognising revenue based on when it’s worked on or when it’s billed.  

What’s Work-in-Progress (WIP) revenue recognition?  

WIP revenue relies on a percentage of completion or delivered revenue for a project or campaign. There are several approaches to determine this figure: 

  • Monitoring burn over budget 
  • Qualitative estimation by an Account Manager or Project Manager on the project’s completion percentage 
  • Evaluating burn value over the estimated burn at completion 

This approach involves assessing the time expended against the total forecast expenditure on the job, multiplied by the approved budget. While considered one of the most accurate methods, it can be challenging for busy account management teams to calculate or forecast on a weekly basis. This is where an efficient and robust agency finance system like Deltek Workbook can help do a lot of the legwork and give account teams more time to focus on looking after clients.  

For more information on revenue recognition based on WIP revenue, take a look at: Is IFRS15 arm-twisting revenue recognition or simply the right method? 

What’s billing revenue recognition? 

Revenue based on billing is determined by the date funds are received in an agency’s bank account, offering a straightforward tracking method. However, larger enterprise holding companies are increasingly favoring Earned Revenue Recognition for its ability to align revenue with work progress, simplifying agency forecasting and improving reporting capabilities. 

Communication Tip: Once your preference is set, communicate it clearly to guide your team’s revenue forecasting. 

2. Format your revenue forecast

When considering how to format your revenue forecast, it’s crucial to determine the level of certainty you want to assign to different revenue streams. We’ve helped agencies adopt practices involving a three-tiered approach: 

  • Guaranteed Revenue: This includes retainers and projects in progress with signed contracts. 
  • Probable Revenue: Jobs in the final negotiation phase, those with verbal client approval, and projects in progress pending relevant contracts. 
  • Possible Revenue: Encompassing briefed-in jobs that require additional steps such as sell-in, scoping, or negotiation before being classified as probable. 


Decide on the need for extra commentary in case of any changes or shifts. This could be managed through regular meetings or digitally recorded information to ensure accountability and track trends in revenue movements. Balancing the advantages of more data with the effort of data entry is key to a successful forecasting process.  

Communication Tip: When communicating the formatted revenue forecast, ensure to provide clear guidelines and explanations for each tier of revenue certainty. Host training sessions or workshops to familiarise your team with the three-tiered approach. Transparency in understanding the format will lead to more accurate forecasts and a cohesive approach within your agency.

3. Develop a Streamlined Forecast Management Process

A simple task, done regularly, is hands down the best way to make it stick. We’ve seen the greatest success when agencies ensure; 

  • Consistent Updates: Update the agency forecast on a weekly basis at a set time each week. 
  • Collaborative Review: Conduct a weekly meeting with the senior account team to collectively review and discuss the forecast. 

Communication Tip: To optimise this process, keep the weekly meeting short and focused, leveraging the already-entered data. This approach encourages collaboration, ensuring accountability and fostering better understanding among team members. 

If your agency is looking for the right tools or processes to improve agency revenue forecasting, contact us 

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Helen Johnson
+61 404 458 797


Christian Arpe-Hansen
+45 31 36 66 03