Glossary
Write-off
A write-off is billable time or fees an agency worked but chooses not to invoice, whether from over-servicing, an estimating error, or a client dispute. It shows up at the point of invoicing rather than in the original scope, which makes it one of the easiest leaks to miss without dedicated tracking.
Write-off rate formula
Write-off rate measures how much of an agency's billable value never makes it onto an invoice. Divide the value written off by the total billable value of the work, then multiply by 100.
Billable value is hours logged as billable, priced at standard rates. The write-off amount is whatever share of that value the agency decides not to charge, whether that decision happens project by project or gets applied in a batch when invoices go out.
Write-off Rate = (Write-off Value / Total Billable Value) × 100
Example: a project logs £40,000 of billable time at standard rates. £3,200 of that gets written off before the invoice goes out. Write-off rate is 8%.
Where write-offs come from
Most write-offs trace back to one of three causes. Over-servicing is the biggest: a team keeps working past the scoped hours without raising a change order, and nobody wants to bill a client for work that was never agreed. Estimating errors come next, when a fixed-fee project runs over because the original quote missed something and the overrun gets absorbed rather than passed on. The third is a quality or delivery dispute, where a client pushes back on an invoice and the agency writes off part of it to keep the relationship intact.
Write-offs vs discounts
A write-off and a discount both reduce what gets collected, but they happen at different points. A discount is agreed upfront or during negotiation, so it is priced in before the work starts. A write-off happens after the time is already logged as billable, when someone decides not to send the bill for it.
That distinction matters for reporting. A steady discount rate can reflect a deliberate pricing choice. A rising write-off rate usually points to a scoping or delivery problem worth investigating.
Keeping write-offs visible
Write-offs are easy to lose track of because they happen at the point of invoicing, often as a quiet adjustment rather than a logged decision. Tracking write-off rate by project, client, and account manager surfaces patterns: one account manager who discounts by habit, or a project type that keeps running over its original scope.
Tying time tracking to a change-order process closes the biggest source, since work that would otherwise get absorbed instead gets scoped, priced, and billed before it turns into a write-off.
Example
An agency logs 320 billable hours on a project at an average rate of £110/hour, worth £35,200. During review, the account manager decides to write off 18 hours of rework caused by a brief that changed mid-project, worth £1,980, rather than raise a change order after the fact. The invoice goes out for £33,220. Write-off rate on the project is 5.6%.
