The Role of Timesheets in Agency Profitability: Agency Profit Podcast

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About the Episode

In this episode of the Agency Profit Podcast, Marcel chats with Parakeeto's own Kristen Kelly about the most controversial topic in agency operations: time tracking. Together, they break down the real reasons why agencies resist time tracking and why that resistance is costing them. Spoiler: it’s not about the tools, it’s about culture, alignment, and misunderstanding the purpose of the data. They dig into how time tracking connects directly to profitability through core metrics like delivery margin, utilization, and average billable rate—and why installing time tracking without a strategy often backfires. Kristen and Marcel also explore modern alternatives to traditional time sheets, and explain why getting team buy-in starts with aligning on goals and defining a clear feedback loop.

Bottom line: time tracking doesn’t have to suck—when it’s implemented with clarity and purpose, it becomes a superpower for agency profitability.

Points of Interest

1:08 – 2:17 – Why Time Tracking Still Matters: Kristen and Marcel introduce the episode’s goal—to reframe time tracking from a frustrating chore into a strategic advantage for agencies.
2:28 – 4:59 – Debunking Common Misconceptions: Marcel breaks down the three common arguments against time tracking, particularly the mistaken belief that it's only relevant for time-and-materials billing.
5:04 – 6:19 – Understanding the Agency Business Model: Marcel explains why all service businesses, regardless of pricing model, must measure time to truly understand costs and profit margins.
6:33 – 8:39 – When Time Tracking Becomes Non-Negotiable: The hosts argue that the ideal conditions for skipping time tracking rarely exist—most agencies operate in too much uncertainty.
8:45 – 10:47 – The Cultural Problem with Time Sheets: Beyond logistics, the core issue is lack of transparency—teams don't understand how time data is used or how it benefits them.
10:53 – 13:12 – Misuse of Metrics and the Consequences: Marcel describes how overexposing metrics like utilization or budget variance skews behavior, leading to inaccurate and untrustworthy data.
14:20 – 16:38 – Time Tracking and Cost Visibility: Even with fixed pricing models, agencies must know how much time goes into work to assess whether it's profitable or sustainable.
16:44 – 18:58 – Key Metrics Affected by Time Tracking: Delivery margin, utilization, and average billable rate are highlighted as critical performance indicators that depend on time data.
19:04 – 21:58 – The Profitability Flywheel Explained: Kristen and Marcel introduce Parakeeto’s four-step framework for building a feedback loop that drives clarity and continuous improvement.
24:22 – 27:33 – Modern Alternatives to Time Sheets: They outline a spectrum of options—from traditional time sheets to resource planning and AI-assisted tools—offering flexibility based on agency complexity.
28:06 – 32:25 – Sequencing Time Tracking for Success: Marcel shares Parakeeto’s phased approach: start with modeling and forecasting before implementing time tracking to ensure team alignment and data utility.

Show Notes

Boost Agency Profits: Calculate your Profitability Targets
https://parakeeto.com/blog/agency-pro...
Maximize Project Profit Margins: Boost Returns Today https://parakeeto.com/blog/project-pr...
Essential Agency Metrics & KPIs for Boosting Profitability https://parakeeto.com/blog/agency-met...
Master Agency Time Tracking: Optimize Without Timesheets https://parakeeto.com/blog/how-to-tra...
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