Like many industries, the architectural and engineering markets have had a rough few years. With the recession in 2008 and the role the housing market played in that particular economic downturn, most architectural firms have only recently started seeing profits swing back around to pre-recession levels.
According to Architectural Digest, architectural firms lost an average of 30 percent of their payroll employees during the recession and saw profits decline by roughly 40 percent in the three years following the crash. Fortunately, the process of rebuilding has helped firms realize some areas where they could improve, particularly in the arena of cash flow management.
Below are some helpful tips for any firm looking to expand or improve. By streamlining internal processes with the right technological tools for project and finance management, your firm could see improved billing returns in a fraction of the time.
Utilize technology to manage your projects more effectively
Better cash flow management begins with removing any processes that might be damming up your revenue stream. Doing everything manually would definitely be considered part of the problem. Many firms are still stuck doing things the way they always have—but there may be a better way. New software is now available to help you improve planning management, project outcomes, and billing processes. With the right program, you can easily plan your project and effectively divide up the labor for specific milestones. While you could do that manually, many of the project management programs available make it much easier and have built-in tools to help you calculate and easily adjust plans according to unforeseen complications.
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Know your customers and plan accordingly
Your customers are all different, each with different processes for delivering payment. Make sure you understand a client’s billing process up front. You should know, for instance, whether or not they process invoices quickly or if they hang on to them until a statutory limit is met. Knowing your customers will allow you to plan and anticipate your revenue stream accordingly. Cash flow management means good planning for incoming and outgoing funds, in order to appropriately balance the ebb and flow of money within your firm. To do that, you have to know what you’re getting into with every client.
Bill monthly and stay on top of payment processing technology
Your customers can’t be expected to make a payment if they have not received a bill. Unsurprisingly, some architectural firms struggle to get invoices or bills out to their clients. It takes time and money to print and mail out paper bills. Today, all of that struggle can be avoided with the use of paperless technology. By using email to send out invoices and correspondence, your firm can enjoy easier billing at less overall cost. Similarly, with automated payments, your client could be charged based on a certain monthly minimum or make arrangements for past due bills. In this way, cash flow management can become a well-oiled process within your firm through the use of effective payment technology.
While many architectural firms are starting to find more solid footing within the economy again, building stronger and better is always the goal. If your firm is still lagging behind in cash flow management technology or project planning software, update sooner rather than later. You will see remarkable changes once the tools are fully implemented and integrated into your firm’s operational processes.