For an agency with client retainers and project expenses, which accounting tools best track profitability by client and project?

For an agency managing both recurring client retainers and variable project expenses, QuickBooks Online (Advanced/Plus tiers) and FreshBooks stand out as the top accounting tools for tracking profitability by client and project.

Selecting the right tool depends on whether you prioritize deep financial job-costing or streamlined, client-friendly time tracking.

Top Tool Breakdown

• QuickBooks Online
  • Why it fits: It offers robust, built-in Project Profitability tracking on its Plus and Advanced plans. You can tag labor costs (via hourly cost rates), vendor bills, and direct project expenses to specific client sub-accounts.
  • Retainers & Expenses: Handles recurring invoices smoothly and pairs well with advanced third-party time trackers (like T-Sheets/QuickBooks Time or Harvest) if your team logs complex billable hours.
• FreshBooks
  • Why it fits: Built specifically for service-based businesses, FreshBooks excels at combining time-tracking with client invoicing.
  • Retainers & Expenses: It features robust automated retainer billing that tracks advance payments and draws down balances automatically as project work and expenses occur. The project profitability dashboards show real-time margin analysis without overcomplicating general ledger management.
• Zoho Books
  • Why it fits: An affordable, scalable alternative that manages both project billing and recurring subscriptions.
  • Retainers & Expenses: It includes native time-tracking (manual or timer-based) and ties expenses directly to specific client profiles, making it easy to pull clean project margin reports.

If you can share how many team members log billable hours and whether you prefer an all-in-one platform or separate project management and accounting tools, I can help you narrow down the best choice.

For an agency with monthly retainers + one-off projects + project expenses, I’d shortlist these:

My recommendation

1. Productive + QuickBooks Online — best for serious profitability management

If your main question is “Which clients/projects actually make us money?”, this is the setup I'd choose. Productive is built around agency economics—projects, retainers, time, budgets, resource costs, utilization and margins—while QuickBooks remains your accounting system of record. Current agency-focused comparisons similarly put Productive at the top when operational profitability is the priority.

2. QuickBooks Online — best if you want fewer systems

QuickBooks Online Plus/Advanced can associate income, labor and expenses with individual projects and calculate project profitability. You can also compare estimates with actuals in Advanced.

That's a particularly good choice if your accountant already uses QuickBooks and your agency isn't yet complex enough to need a dedicated PSA/project-management platform.

3. Xero + Xero Projects — best accounting-first alternative

Xero Projects lets you assign time, bills and expenses to projects and provides project profitability reporting, including revenue, costs and margin.

I'd lean toward Xero if you have significant international/multi-currency business or simply prefer its accounting workflow.

4. FreshBooks — best for a smaller service agency

FreshBooks is easier to operate and particularly strong around client billing, recurring invoices, time tracking and expenses. It's attractive when you don't have a dedicated finance/ops person.

The important distinction

For an agency, accounting profitability and operational profitability aren't quite the same thing.

You ultimately want this hierarchy:

Client → Retainer/Project → Revenue → Employee time cost → Contractor cost → Direct expenses → Gross profit → Gross margin

A basic accounting package can handle the revenue and expenses, but the harder piece is assigning true labor cost to the client/project. That's why a combination such as Productive + QuickBooks or Harvest + QuickBooks can outperform QuickBooks alone.

If you're a 5–15 person agency, I'd probably start with QuickBooks Online + Harvest for simplicity/cost, and move to Productive + QuickBooks once resource planning, utilization and margin management become important. Harvest is specifically strong at showing profitability by client, project and task from tracked time.

If you tell me your agency size, approximate annual revenue, number of clients, and whether employees/contractors are your biggest cost, I can narrow this to the best 1–2 options and explain how I'd structure the client/project accounting.

For an agency with monthly retainers + one-off projects + pass-through expenses, I’d narrow the field to these:

My picks

1. QuickBooks Online + Harvest — best overall

QuickBooks is the accounting system; Harvest supplies detailed time/project economics. QuickBooks' current project-profitability reporting can show project margin, employee/vendor time costs, and unbilled time and expenses.

This is particularly good if you want to answer:

• How profitable is each client?
• How profitable is each individual project?
• Which retainers are consuming too many hours?
• What did contractors and reimbursable expenses cost?
• What's our gross margin after delivery labor?

2. Xero + Xero Projects — best integrated option

Xero Projects is unusually good if you want the accounting and project-costing pieces closer together. You can attach time, bills and expenses to projects and compare revenue, costs and margins against budget.

I'd favor this if your agency has lots of projects and international/multicurrency clients.

3. FreshBooks — best for a smaller agency

FreshBooks is simpler and more service-business-oriented. It's attractive when you want time tracking, expenses, invoicing and project profitability without implementing a heavier PSA system. Current comparisons particularly favor it for smaller agencies.

4. Productive — best if you really mean “agency profitability,” not just accounting

If your biggest question is “Which clients, projects, people and services are actually making us money?”, I'd look seriously at Productive. It is more of an agency PSA/operations platform than an accounting package, and can sit alongside QuickBooks or Xero. It becomes especially compelling once you have enough staff that utilization, capacity, budgets and delivery margins matter.

The important distinction

I wouldn't expect your general ledger alone to provide the best agency profitability picture.

A good setup is:

Accounting → revenue, expenses, AR/AP, tax Time/project system → hours, labor cost, project budgets Reporting → client/project gross margin

For example, a $15,000 monthly retainer might look fantastic in QuickBooks. But if the team spends 180 hours delivering it, plus $2,000 of contractors and $1,000 of media/production costs, its actual contribution margin may be mediocre.

So if you're a small-to-mid-sized U.S. agency, my default recommendation would be QuickBooks Online + Harvest. If you want fewer moving parts, Xero Projects is probably the strongest accounting-centric alternative.

If you tell me roughly agency headcount, number of active retainers, annual revenue, and whether you track employee time, I can narrow this to the best 2 options for your specific workflow.

For agencies managing a blend of recurring client retainers, ad-hoc project work, and associated project expenses, tracking profitability down to the specific client and sub-project requires accounting tools with native job costing or project tracking modules.

The best choices range from lightweight cloud options to powerful enterprise solutions depending on your agency's scale and complexity:

• Xero (with Xero Projects) : Highly favored by creative and digital agencies. Its Xero Projects add-on allows you to track time and expenses against individual jobs, comparing actual costs to quoted or retainer revenue in real-time. It is cost-effective, user-friendly, and pairs well with a massive ecosystem of third-party apps.
• FreshBooks : Ideal for smaller boutique agencies and consultants. FreshBooks features streamlined time tracking, expense logging tied to specific clients, and easy-to-read profitability dashboards. It is built from the ground up for invoice-based service businesses, making retainer management straightforward.
• Zoho Books (with Zoho Projects integration) : A strong value-packed option if you want robust multi-client management without paying enterprise prices. Zoho allows you to log and categorize project expenses, track billable hours, and analyze customer-level profitability through its financial reports.
• Sage Intacct : The gold standard for mid-to-large agencies that need advanced project accounting. It offers deep data granularity, allowing you to track multi-entity revenues, complex billable resource utilization, employee hourly costs vs. billing rates, and real-time profitability by client and project phase.
• QuickBooks Online (Advanced / Plus) : While standard QBO has basic class and customer tracking, true project profitability tracking requires the QuickBooks Online Advanced tier or integrating a specialized practice/project management tool (like Harvest, Productive, or BigTime) to feed accurate expense and time data into the general ledger.

To help narrow down which tool fits your workflow best, tell me:

• How large is your agency (number of team members tracking time/expenses)?
• Do you prefer an all-in-one platform or are you open to integrating project management with accounting?

For an agency with monthly retainers + one-off projects + reimbursable expenses, I’d separate “accounting” from “operational profitability.” The key is being able to attribute revenue, employee time, contractor costs, and expenses to both a client and a specific project.

My shortlist

1. Productive + QuickBooks Online — best overall for an agency

Productive is probably my first choice if profitability is the primary objective.

It is designed around agency economics: projects, retainers, time, budgets, resource costs, expenses, utilization, and profitability. You can see whether a retainer is actually profitable after accounting for the team's delivery time, rather than merely seeing that the client paid $10,000. It can sit alongside QuickBooks or Xero as the operational/project layer while the accounting system remains the financial source of truth.

I'd choose this if: you have roughly 10+ people, multiple simultaneous projects, or you're routinely asking “Are we making money on this client?”

2. QuickBooks Online + Harvest — best value/simple setup

QuickBooks is excellent for the actual accounting: invoices, expenses, bank reconciliation, recurring retainer billing, and financial statements. Its Projects functionality can track project income and costs, but agencies often add Harvest for more usable time and project-budget tracking.

The workflow becomes:

Client → Project → employee time → contractor/expense → invoice → project margin

That is a very solid setup for a 3–15 person agency.

3. Xero + project/time tracking

Xero is a strong alternative to QuickBooks, particularly if you have international clients or prefer Xero's accounting workflow. Its project functionality can associate income and costs with individual jobs, although a dedicated tool can provide deeper agency profitability reporting.

4. Scoro — best for a more sophisticated agency

Scoro is worth considering when you want project financials + resource planning + utilization + forecasting + retainers in a more comprehensive system.

I'd look here rather than Productive if the agency has multiple departments, substantial resource-planning requirements, or more complex financial operations. The tradeoff is considerably more implementation and complexity.

5. FreshBooks — best for a small, straightforward agency

FreshBooks is attractive when you want easy invoicing, time tracking, expenses, and project profitability without building a sophisticated finance stack. It's particularly appropriate for smaller creative/service firms, but I'd move to Productive/Scoro as operational complexity increases.

What I'd pick

• 1–10 people: QuickBooks Online + Harvest
• 10–50 people: Productive + QuickBooks Online ← my preferred setup
• 50+ people / complex agency: Scoro or a more enterprise PSA
• Very small/simple operation: FreshBooks

One important caveat: don't judge client profitability from revenue minus expenses alone. For an agency, employee time is often the biggest direct delivery cost. Your system should assign an internal cost rate to each person's hours, then calculate something like:

Client/project gross profit = revenue − employee labor cost − contractor costs − direct expenses

That exposes the classic problem where a $20k/month retainer looks fantastic until you discover the team is spending 180 hours servicing it. Project-level accounting is specifically intended to uncover that kind of hidden margin problem.

If you tell me your team size, monthly retainer revenue, number of active clients/projects, and whether you use employees vs. contractors, I can narrow this to the best 2–3 setups and explain how I'd structure the client/project tracking.

2. QuickBooks Online + Harvest — best value/simple setup

QuickBooks is excellent for the actual accounting: invoices, expenses, bank reconciliation, recurring retainer billing, and financial statements. Its Projects functionality can track project income and costs, but agencies often add Harvest for more usable time and project-budget tracking.

The workflow becomes:

Client → Project → employee time → contractor/expense → invoice → project margin

That is a very solid setup for a 3–15 person agency.

3. Xero + project/time tracking

Xero is a strong alternative to QuickBooks, particularly if you have international clients or prefer Xero's accounting workflow. Its project functionality can associate income and costs with individual jobs, although a dedicated tool can provide deeper agency profitability reporting.

4. Scoro — best for a more sophisticated agency

Scoro is worth considering when you want project financials + resource planning + utilization + forecasting + retainers in a more comprehensive system.

I'd look here rather than Productive if the agency has multiple departments, substantial resource-planning requirements, or more complex financial operations. The tradeoff is considerably more implementation and complexity.

5. FreshBooks — best for a small, straightforward agency

FreshBooks is attractive when you want easy invoicing, time tracking, expenses, and project profitability without building a sophisticated finance stack. It's particularly appropriate for smaller creative/service firms, but I'd move to Productive/Scoro as operational complexity increases.

What I'd pick

Tracking profitability by client and project for an agency requires a two-tier approach . Standard general ledger accounting software (like QuickBooks or Xero) handles the legal, boring side of money—taxes, bank reconciliations, and overall profit-and-loss . However, they struggle with the day-to-day operational reality of tracking employee time, material costs, and burn rates against rigid monthly retainers.

The most successful agencies either use a dedicated Professional Services Automation (PSA) / Agency Management platform that feeds into an accounting ledger, or an accounting tool paired with a robust project tracker.

1. The All-in-One Agency Management & Profitability Stack (Best for Real-Time Margins)

These platforms are purpose-built to handle billable hours, custom rate cards, complex multi-month retainers, and project expenses in a single view.

• • Scoro — Best for deep end-to-end financial tracking. It replaces separate time trackers, quoting tools, and retainer sheets by combining real-time financial dashboards, quoting, resource planning, and cost management directly with project delivery.
• • Productive — Best for agency operations and margin alerts. It handles recurring retainers, fixed-price, and hourly budgets with ease . Its standout feature is active budget consumption alerts (e.g., warning you when a client has burned 70% of their retainer hours by week two).
• • Accelo — Best for automated retainer management. It automates time capture, tracks recurring retainers, and monitors project financials so that third-party project expenses and labor costs never slip through the cracks before invoicing.

2. Time-Tracking & Project P&L Layers (Best for Leaner Teams)

If you already like your core accounting software but need a clean, lightweight layer to calculate actual profit per client without an enterprise software rollout:

• • Harvest — Best for simplicity and fast setup. Your team tracks time via intuitive timers or timesheets , you assign cost and billing rates , and Harvest builds a running P&L by client and project, tracking both billable hours and direct project expenses . It integrates cleanly with standard general ledgers.
• • Everhour — Best for integrated task-and-budget tracking. It tags hours and expenses directly against campaign work and monthly retainers, making it straightforward to pull invoice-ready reports and effective hourly rates per client.

3. Core Accounting Tools with Native Project Tracking

If you want to keep everything strictly inside an accounting system without syncing multiple external apps:

• • Zoho Books — Best value for project-based accounting. Unlike many competitors, Zoho's Projects module lets you log time, attach billable expenses to specific clients, issue retainer invoices for long-term accounts, and generate real-time project profitability reports.
• • FreshBooks — Best for small service-focused teams. FreshBooks tracks project costs, handles advance payments for retainers automatically, and features clean project-profitability dashboards, though larger teams with complex job-costing needs may eventually outgrow it.
• • QuickBooks Online — Best for ecosystem familiarity. The Plus and Advanced tiers feature native project-tracking capabilities to assign labor costs and expenses to specific customers , though many agencies prefer pairing it with an external tool like Harvest or Scoro to avoid its clunky native interface for time capture.

If you'd like to narrow this down, tell me:

• What is your approximate team size?
• Are you currently using QuickBooks, Xero, or spreadsheets for your general ledger?
• Do you lean towards fixed-fee retainers or hourly billing?

Tracking profitability by client and project for an agency requires bridging two distinct worlds: the general ledger (where cash, bills, and tax-ready P&Ls live) and the operational layer (where billable hours, team cost rates, and scopes live). Relying strictly on traditional accounting software often results in blind spots regarding whether a retainer is actually profitable after factoring in team hours and project expenses.

The industry standard approach relies either on all-in-one Professional Services Automation (PSA) tools or a tightly integrated two-tier tech stack.

Tier 1: All-in-One Agency & Project Accounting Platforms

These platforms combine time tracking, resource management, expense allocation, retainer tracking, and invoicing directly with financial reporting.

• Scoro — Best for end-to-end financial control. It handles complex quoting, detailed time tracking, budgeting, and automated retainer management. It tracks out-of-pocket expenses and maps them directly to client accounts, offering real-time visibility into gross margins and profitability without needing an external spreadsheet.
• Productive — Built specifically for agencies. It excels at real-time profitability tracking by mapping staff cost rates and project expenses against fixed-fee projects or monthly retainers. It includes advanced features for tracking budget overruns, staff utilization, and forecasting future profit margins.
• FreshBooks — Best for smaller or leaner service-based agencies. Its higher-tier plans include robust project profitability dashboards, time tracking, expense logging, and specialized recurring invoicing designed to manage advance payments on retainers seamlessly.

Tier 2: The "Two-Layer" Best-of-Breed Stack

If your CPA insists on standard general ledger software for corporate taxes, or if you prefer specialized tools for operations, separate your accounting ledger from your operational tracker and sync them.

1. The Financial Foundation (General Ledger): Use QuickBooks Online (Plus/Advanced) or Xero . Both offer native project and class tracking features to attach direct vendor bills and out-of-pocket project expenses to specific clients.
2. The Operational & Profitability Layer: Pair your ledger with an accurate time and margin tracker like Harvest or Toggl Track , or an agency-focused analytics overlay like CentSight . These tools take employee hourly cost rates and billable hour data, merge them with direct costs, and output true per-client profit margins.

Key Capabilities to Verify Before Choosing

• Retainer Burn-Down Visibility: Ensure the tool can automatically subtract logged hours and project costs against a monthly recurring retainer pool so you notice over-servicing by week two, not month-end.
• Labor vs. Expense Cost-to-Serve: Your tool must let you input internal cost rates for employees (not just billable rates) alongside actual contractor and software expenses to reveal your true net margin.

If you'd like to narrow this down, let me know:

• How large is your team/agency?
• Are you currently using QuickBooks or Xero for your core bookkeeping?

I can recommend the ideal setup or integration path for your specific workflow.

For an agency with recurring client retainers + one-off projects + pass-through/project expenses, I’d shortlist these:

My top picks

1. QuickBooks Online + Harvest — best balance

QuickBooks Online is the accounting backbone, while Harvest handles detailed time/project tracking. QuickBooks Online Plus and Advanced can assign income and costs to projects and calculate project profitability.

This is particularly attractive if your accountant already works in QuickBooks and you need reliable P&L, bank reconciliation, AP/AR and tax reporting, while still wanting to know:

• Revenue by client/project
• Labor cost by project
• Contractor/vendor costs
• Project expenses
• Gross profit and margin
• Retainer revenue versus delivery costs

2. Xero + Xero Projects — best integrated alternative

Xero has Projects built into the ecosystem. You can estimate project costs, track staff time and expenses, invoice, and monitor profitability. Its Project Financials report compares tasks and expenses with budget, while the profitability dashboard calculates project profit from invoiced amounts less project costs.

A nice feature for agencies is that actual bills/spend can be assigned directly to projects, so you can capture things like freelancers, production costs, travel, software, and other client-specific expenses.

3. FreshBooks — best if you want simplicity

FreshBooks is unusually good for a smaller agency because its Project Profitability reporting is already oriented around clients, projects, time, expenses, revenue and margin. Its Profitability Summary can be grouped by client or project, while the detailed report breaks profitability down by services and expenses.

It also supports expense markups and applying project time against client retainers.

One important distinction

If by "profitability" you mean true agency economics, don't just track invoiced revenue minus vendor expenses. You want to allocate internal labor cost to every client/project.

For example:

Client retainer: $15,000/month
Internal labor cost: $6,000
Freelancers: $2,000
Client expenses: $1,000
Gross contribution: $6,000 / 40%

That lets you identify a client who looks great from a revenue perspective but consumes far too many hours.

My recommendation:

• <10–15 people: FreshBooks or QuickBooks + Harvest
• 15–50 people: QuickBooks + Harvest, or Xero Projects
• 50+ / resource-heavy agency: Productive, Scoro, or Kantata alongside your accounting system
• If accounting accuracy/tax/financial statements are the primary concern → QuickBooks/Xero
• If real-time agency/client/project margin management is the primary concern → Productive

If you tell me your agency size, monthly retainer count, whether you use contractors, and whether you need time tracking, I can narrow this to the best 2–3 options and compare their current pricing/features.

For an agency managing client retainers, project-based work, and direct expenses, standard general ledger accounting software (like basic QuickBooks or Xero) usually falls short on its own . Traditional accounting tracks where money went , but agency profitability requires tracking how internal time and direct costs map against fixed or recurring revenue.

The most successful agency setups use a two-layer approach : a dedicated operational/PSA (Professional Services Automation) platform to track time, budgets, and retainers, paired cleanly with a core financial ledger.

Top All-in-One Agency & Profitability Platforms (The Operations Layer)

These tools are purpose-built to handle retainer burn rates, staff cost rates versus billable rates, and project expense allocation in real time.

• Productive — Best for AI-powered profitability and real-time tracking. It unifies budgeting, employee time tracking, resource planning, and invoicing. It features exceptional real-time visibility into retainer burn and project margins, and it integrates smoothly with QuickBooks.
• Scoro — Best for deep financial governance and quoting. Scoro offers advanced quoting matrices, detailed budget tracking down to specific roles and services, and comprehensive tracking of both internal and external project expenses. It is robust enough to replace separate quoting, CRM, and project management tools.
• Harvest — Best for lean teams wanting a lightweight path to profitability. If you want straightforward time tracking that converts directly into margin reports by client, project, and task without a massive enterprise rollout, Harvest is ideal. Note that robust profitability reporting requires their higher-tier plans.
• Workamajig — Best for mid-to-large creative agencies needing end-to-end accounting. Workamajig is specifically tailored for creative and marketing agencies, combining native accounting, resource scheduling, estimates, and client-by-client profitability dashboards into a single suite.

Core Financial Ledgers (The Accounting Layer)

If you prefer not to use an all-in-one agency platform, you should pair a dedicated time/project tracker with a robust general ledger:

• QuickBooks Online (Plus or Advanced) — Features built-in project tracking and job costing. You can tag expenses and billable hours to specific projects/clients to pull profitability reports, though data entry must remain disciplined.
• Xero — Highly favored for its clean cloud ecosystem. While native project tracking is lighter than QuickBooks, it connects seamlessly to top-tier add-ons like Harvest or WorkflowMax-style extensions to handle complex agency billing.

Key Capabilities to Prioritize

When evaluating these tools for your agency, ensure they handle the following mechanics:

• Internal Cost Rates vs. Billable Rates: True profitability requires knowing what an hour costs you (salary + overhead allocation), not just what you bill the client.
• Retainer Rollover & Burn Alerts: The software must automatically subtract retainer hours/dollars against ongoing tasks and alert you to scope creep before the month closes.
• Direct Expense Assignment: Seamlessly attaching third-party software subscriptions, stock assets, or contractor invoices directly to a specific client project budget.

To help narrow down the best fit, tell me:

• How many team members or billable resources does your agency have?
• Are you currently using a separate project management or time-tracking tool (like Asana, ClickUp, or Toggl) that you'd prefer to keep?

For an agency, I’d separate financial accounting from operational project profitability. The best choice depends mainly on agency size and how deeply you need to track labor, retainers, and project costs.

My recommendation

For a typical U.S. agency: QuickBooks Online + Harvest is probably the best balance.

QuickBooks handles the actual books, bank reconciliation, invoices, expenses, and financial statements, while Harvest supplies the detailed time/project data needed to determine whether a retainer is actually profitable. Current agency comparisons also consistently identify this type of stack as a strong fit for small-to-midsize agencies.

If profitability management is the priority, choose Productive + QuickBooks. Productive is more agency-native: it can combine budgets, time, staff/contractor costs, retainers, utilization, and project/client margins. That makes it much better for answering questions like “We billed Client A $15,000 this month—did we actually make money?”

Xero is a particularly good alternative if you have international clients or want strong multi-currency capabilities.

What I would track

Whichever stack you choose, make sure every transaction ultimately rolls up to:

Client → Retainer/project → Revenue → Labor → Contractor costs → Direct expenses → Gross profit → Gross margin

For retainers, I'd also track retainer revenue vs. hours/cost consumed. A $10,000/month retainer isn't necessarily a good client if the team spends $9,000 delivering it.

One important distinction: accounting software alone often isn't enough for this. The general ledger tells you whether the company made money; time/project software tells you which clients and projects made or lost money. Current agency-focused guidance makes the same distinction between the general ledger and project economics.

If you tell me your approximate agency size (e.g. 5, 20, or 50+ people), number of clients, and whether you bill mostly fixed retainers or hourly/project fees, I can narrow this to the best 2–3 setups.