Most of us have had that one client.

The one who sends “quick” emails at 9:00pm, asks for “just one more change, or update, or addition,” and somehow takes up 80% of your head space.

Here is the million-dollar question: Are they actually making you money?

Often, we keep these clients because the revenue looks good on paper, but the revenue is a vanity metric. If you want to know if a client is worth keeping, you have to look at their Margins.

~The “Clean Books” Connection

You cannot identify a “money-pit” client if your books are messy. When your expenses are just a giant pile of uncategorized transactions, every client looks the same.

Good bookkeeping habits allows you to do job cost. By tracking expenses and time against specific projects or clients, you can see the truth. Sometimes, the client paying you $5,000 is actually less profitable than the quiet client paying you $2,000 because of the hidden costs involved.

~ The ‘Hidden Cost’ Checklist

To see if a client is costing you too much, you need to track these three things in your books:

Direct Expenses: Did you have to buy specific software, materials, or contractor help, just for them?

The Time Factor: If you don’t track your hours, you’re flying blind. If a project quoted for 10 hours takes 25, your hourly rate just got cut in half.

Opportunity Costs: If your client takes up all of your time, you don’t have the capacity to say ‘yes’ to a high-profit low-stress client.

The easiest way to check your client’s profitability is to add the direct expenses + the labor costs, then subtract that from the revenue that client brings in.

If that number is slim or (negative), then your books are trying to tell you it’s time to let them go or raise your rates.

~ Here are a few tools to help you start measuring what matters.

Toggl Track- A free simple timer. Even if you don’t bill by the hour, track your time for two weeks. The data may shock you.

QuickBooks ‘Projects’ Feature- If you use QBO, turn on the Projects tab. It’s a game changer for seeing exactly which jobs are actually putting money in your pocket.

I had inspiration for this newsletter of course.

I was going through the COGS with a client when she realized her biggest client required a lot of specialized shipping and outsourced labor, and that she was actually losing hundreds of dollars every time she invoiced them.

Sometimes, you have to fire your biggest client.

~ Are your books giving you the green light to grow, or the red flag to pivot?

If you aren’t sure which clients are actually contributing to your paycheck, get your data cleaned up so that you can see the truth.

It shall truly set you free……. free to make the absolute best decisions with your money for your business.

Quote of the day

Thank you.

This year went by QUICK! I have been saying for a while now, it seems like the Earth is spinning a little faster these days. Time is flying. And I don’t think I am the only one that notices it either. It has been a ride. I look forward to this new year being great. I am going to dedicate more time to focusing on results and outcomes and the processes and methods that lead to them.

I hope things are working and coming together for you. As always, I appreciate your support. If you have any questions, or need support in any way, please do not hesitate to reach out. Take care and thank you. 💛

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