Simplifying Financial Management for Architects
From an Accountant’s Perspective
We would like to lend an accountant’s perspective on some key strategies which help you in maximizing profitability and efficiency in your firm. These simple yet powerful approaches enable better managing and tracking of your finances to view the profitability of a project, even before signing the contract.
At Reach CPA, we highly recommend a dedicated accounting software. Xero is our preferred option for its ease of use and powerful reporting capabilities. There are other cloud-based options such as QBO, Wave Accounting and FreshBooks that would all cover the basics as well. If internet is not reliable in your area, then Sage is probably the best desktop option out there.
It should go without saying that a bank account and a credit card for your business that are separate from your personal accounts is a must
To help our clients streamline their finances and process expenses more efficiently (and ultimately making their life easier) we created our ‘Reach the Mark’ FREE online course. Visit our webpage here, to learn more.
The next best thing you can do for your firm, if it’s not already in place, is to have the bank account and a credit card for your business that are separate from your personal accounts is a must.
Scaling Beyond Excel for Architectural Success
Cash in the bank is a lagging indicator. Meaning that for there to be money in the bank, everything before that - preparing quote, managing scope creep, staff efficiency, project management, billing, collection, etc. - all must have gone well. A hiccup at any of those steps can negatively impact your cash, so having the tools and system to detect the hiccup early can save much stress and improve your profit and cash flow.
When the firm is just you, or a small team of 2-3, Excel and your deep involvement might be enough to navigate all this. But when firms grow beyond those few employees, we highly recommend moving on from Excel (and/or gut feeling) to a project management software to track quotes/estimates, time, and cost for each project.
There are many options here as well: WorkflowMax ($10/user), Monograph ($45/user), Workguru ($30/user), Timecamp ($5/user) are the ones we have most experience with. These will enable you keep your fingers on the pulse of your projects and your employees much better.
Effortless Collaboration and Invoicing
We strongly encourage businesses to make the shift to cloud-based software if they haven’t done so already.
You and your advisor team, including a bookkeeper, accountant, financial planner, and others, can collaborate more easily. Access from anywhere allows you to keep the data up to date with less effort and friction. Additionally, most cloud-based software offers integrations that further enhance efficiency and productivity.
For instance, our current favorite combination is Xero for accounting and Workguru for project management.
The team logs project time in Workguru through the browser or mobile app.
Project costs are seamlessly uploaded to Xero's document management system, extracting details like date, vendor name, amount, and tax automatically in under 10 seconds.
The information is then published to your payables in Xero.
Simultaneously, the cost is promptly pushed to Workguru, allowing you to assign it to a project with just one click.
The project dashboard updates real-time comparisons between project quotes and actuals, covering both time and cost.
Workguru's user-friendly invoicing system requires just a few clicks to generate an invoice, seamlessly syncing with Xero's accounts receivable.
Automated collection reminders are sent at your preferred intervals.
Real-time Financial Clarity
With this finance system, or a similar one, a business can quickly obtain an accurate snapshot of its financial status within 24 hours. This means you can determine how much your business earned so far this year as of yesterday, assess the project's alignment with the budget as of yesterday, and anticipate your cash balance in 14, 30, or 60 days.
Key Takeaways
There is no one right or wrong answer for how to best maximize profitability and efficiency in your business. However, focusing on simple strategies with the initial tracking of expenses helps lay the groundwork for knowing your ins-and-outs.
Some important insights to remember:
Smart Software Choices: Opt for Xero, or an alternative such as QBO, Wave, or FreshBooks for streamlined financial management.
Foundational Practices: Maintain separate business bank and credit card accounts for clarity.
Effective Scaling: Shift from Excel to tools like WorkflowMax, Workguru, Monograph, or Timecamp for growing firms. Keep a close eye on quotes, estimates, time, and costs for improved project oversight.
Effortless Collaboration: Embrace cloud-based software for smooth collaboration, efficient accounting and project management, enjoying real-time updates and simplified invoicing.
Instant Financial Insights: Implement systems for quick financial snapshots, gaining insights into earnings, project alignment, and cash projections within 24 hours.
Get in Touch
Interested in learning more about the services we offer for Architects, Engineers, and Construction businesses? Follow the button below to be directed to a Team member who can help answer your questions.
Also, check out our ‘Reach the Mark’ accounting course to nail the accounting basics to work smarter, not harder. Our FREE online course teaches you how to harness your numbers, streamline your processes and equip you with the tools to manager your business finances.