Growth can hide a loss. One firm’s filings show how.

Most firm owners track revenue every month. Far fewer track the profit on each client. The collapse of Retinue Accounting shows what can happen in the space between those two numbers.

Much of what’s now known about Retinue comes from Ryan Tan’s reporting for Unaudited. In his two-part investigation, Cost of Sales and First in Line, Tan sets the account of former Retinue Head of Tax and Accounting Elvis Sehovic against the administrators’ and liquidators’ reports. The two line up closely.

Retinue began trading from North Sydney in April 2023 with a subscription model, a large sales team and an offshore delivery team. For a while, it grew faster than any accounting firm in the country.

Less than two years later, in February 2025, administrators were appointed.

The figures Tan surfaced show the core problem. In FY24, the firm earned $4.25 million in revenue and spent $10.86 million delivering the work. Sales commissions that year were $7.54 million, more than the firm earned. By Tan’s calculation, Retinue spent $7.36 for every dollar it billed that year.

Over 22 months, it lost about $38.9 million. Tan puts that at roughly $56,800 a day.

The business was later sold for $1.00 upfront, plus deferred payments. The liquidators estimate unsecured creditors, including some clients, will receive nothing.

It’s easy to look back at numbers like these and wonder how anyone missed them. The more useful question is why the story was so easy to believe.

For years, the profession has been told the same thing: modernise, scale, go offshore, move to subscriptions. Retinue looked like that advice played out at full speed. Fast growth felt like proof the model worked.

But accounting firms earn money slowly. A new client usually costs the most in year one, when you’re onboarding them, cleaning up their books and learning how they work. The profit comes in years three, four and five, once the work runs smoothly and the client trusts you enough to refer others.

Retinue’s model ran the other way. It paid sales up front and lost money on delivery from the first month. In effect, it was betting against the way firms actually make a profit.

Tan reports that the sales floor had a bell it rang for every sale. That detail says a lot about what got celebrated. In a healthy firm, the moment worth celebrating comes later: the client still there three years on, paying on time and sending their friends your way.

Then there’s who paid for it. Staff, suppliers and clients who had paid in advance carried most of the loss. For a profession built on trust, that’s the part that stings most. Each collapse like this makes the next small business owner a little more wary of every firm, including the well-run ones.

None of this makes growth, subscriptions or offshore teams the problem. All three work well in the right model. What matters is the order: price the work properly, deliver it well, and then scale.

Every new client brought in more revenue. Each one also cost more to serve than it paid.

When that happens, growth makes the loss bigger. A firm with 100 clients losing $50 a month on each is down $5,000 a month. Grow to 1,000 clients and the same model loses $50,000 a month.

Retinue’s figures were extreme, but the pattern shows up in ordinary firms too. It usually starts with something small:

• a fixed fee quoted to win a client, never checked against the hours it takes

• a bonus paid when a contract is signed, whether or not the client stays

• new staff hired for growth that hasn’t arrived yet

You don’t need a finance team to catch this early. Four checks cover most of it.

1. Gross margin per client. Take each client’s fee and subtract the cost of the hours spent on them. Do it for your 20 biggest clients first. Any client with a negative number needs a price review or a scope review.

2. Fixed fees against actual time. Compare quoted hours with real hours every quarter. When the gap grows past 20%, reprice at renewal.

3. How sales are rewarded. If bonuses are paid on signing, think about paying part of it after the client’s first six or 12 months. That ties the reward to clients who stay and pay.

4. Capacity before hiring. Map how full your current team is before adding more people, whether onshore or offshore. Offshore staff lower the cost per hour, but a poorly priced job still loses money at a lower rate.

Retinue had a strong revenue story. The filings told a different one.

Our view is simple. The firms that last are the ones that know what each client earns them, and grow at the speed their delivery can keep up with. That kind of growth is slower and less exciting. It’s also the kind that leaves staff paid, clients served and the profession’s reputation intact.

Read the full investigation: Ryan Tan’s two-part series on Unaudited goes much deeper into the sale, the creditors and the funding behind Retinue. Start with Part 1, Cost of Sales.

The administrators found no grounds for claims of insolvent trading, unfair preferences or breach of directors’ duties. No allegation of wrongdoing is made against any person or entity named here.