How to bill ad spend and pass-through costs to clients

What counts as a pass-through cost

The marketing agency workflow connects this review with campaign time and manually itemized supplier costs, with the product limits stated explicitly.

Pass-through costs are purchases your agreement permits the agency to charge onward to the client. Examples can include approved advertising spend, a project-specific software license, printing or travel. A cost being useful to delivery does not automatically make it reimbursable. General office software may remain agency overhead unless the client explicitly agreed a different arrangement.

Start by identifying the supplier account holder and the party responsible for paying it. Direct client payment to the advertising platform can reduce the agency's need to fund media spend, but requires agreed access and responsibilities. If the agency pays first, document a purchase limit and who authorizes it. Keep the service fee separate from this decision: managing a campaign and buying advertising are different activities. The agreement should make that distinction before anyone commits a card or opens a supplier account.

Bill it on its own invoice line, not inside your fee

Use a separate line for each intelligible category of purchased cost, with a period or receipt reference. A client should be able to match the billed amount to the approved purchase without reverse engineering your service fee. Avoid putting a single unexplained media amount beside delivery hours and expecting the reader to know whether it includes management time.

Illustrative fictional example, USD, excluding taxes: campaign management is $1,000 and an authorized platform purchase is $2,000. Show the $1,000 service fee and $2,000 purchase separately for a $3,000 subtotal. This assumes no markup and no tax calculation. ABH invoice lines can describe charges, but there is no dedicated automatic reimbursable-expense or markup feature. Time-backed evidence explains the management work; the supplier receipt explains the purchase. The invoice evidence checklist helps select records without exposing unrelated information.

Advance funding versus reimbursing later

Advance funding asks the client to provide an agreed amount before the agency buys. Reimbursement asks the agency to pay first and invoice the eligible purchase later. Compare the exposure your agency can accept, the supplier's charging cycle and the client's approval process. Put a spending ceiling and replenishment decision in writing rather than assuming funding will always arrive before the next purchase.

An advance is not permission to spend any amount. Keep a separate reconciliation of funded money, eligible purchases and the remaining balance in appropriate records. Do not charge the same purchase again when settling the period. If costs exceed authorization, stop and agree the next action before increasing spend. The advance and arrears guide covers billing timing. ABH does not collect advertising budgets for you; any transfer and supplier payment happen through your external arrangements.

Markup policy and how to disclose it

If you charge more than the supplier cost, disclose the commercial basis before the purchase. State whether the added amount is a fixed handling fee or a calculation on an agreed cost base. Define what the base includes and how changes are approved. Do not call an amount a reimbursement at cost while quietly adding compensation for management to it.

A fictional purchase of $1,000 with an explicitly agreed $100 handling fee produces $1,100 before any applicable tax. This is an example, not a suggested market rate. Show the underlying cost and the handling fee in a way the client can understand and reconcile. Calculate any markup in your own controlled working record; ABH does not calculate or enforce a markup policy. If the agreement is silent, seek clarification instead of deciding the fee when drafting the invoice. Keep the acceptance with the purchase authorization.

Keep the receipts that back each line

Retain the supplier receipt or invoice, purchase date, currency, purpose, client authorization and the allocation to the engagement. A shared software purchase may need a documented allocation rather than charging its entire amount to one client. Verify that the same receipt has not already been billed or funded elsewhere. If the receipt contains another client's details, prepare a safely limited copy for sharing.

Use consistent references across the cost schedule and the invoice so a question about one purchase can be answered quickly. ABH Pro includes expense tracking and a profit and loss report, but tracking a cost is separate from authorizing its rebilling. The agency expense guide covers the agency's own expense records. Do not describe uploading or categorizing an expense as automatically creating a client invoice line. Review the proposed line against the agreement and receipt first.

Record the payment when the client pays

When money arrives through the agency's external payment arrangement, compare the receipt with the invoice reference, currency and amount. A payment may cover only the service fee, only a funded purchase or several invoices. Resolve that allocation before recording a receipt against a particular balance. A screenshot of a transfer instruction is not the same as a confirmed receipt.

An Owner manually records the payment in ABH's append-only ledger with exact amounts. ABH collects no agency client money and takes no transaction fee. Keep the external receipt evidence and any clarification about allocation in your controlled records. The payment terms guide explains references and due dates. Where advance funding remains unspent, follow the agreement and professional advice for settlement; do not treat an invoice payment record as an automatic refund or a supplier-spend reconciliation.

Not tax advice: confirm treatment with your accountant

The same commercial label can have different tax and accounting consequences depending on your jurisdiction and arrangement. Ask your accountant how supplier costs, handling fees, advances and any credits should be documented. Bring the actual supplier invoice and agreement, including who purchased the service and who is liable for it. This guide does not determine whether a charge is taxable or how it should be reported.

Before the next purchase, check authorization, funding, line description, receipt reference and settlement responsibility. Put unresolved treatment on a review list rather than guessing to finish an invoice. For a small team, a simple written purchase schedule may be enough to make the process reviewable. The small-agency overview describes ABH's billing role. Keep accounting decisions with the qualified adviser and keep a distinct record of what was approved commercially.