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Module 03 Lesson 01a Financial Management

This document discusses financial management and systems for architectural practices. It covers establishing a practice through initial funding sources and a business plan. It also discusses establishing a financial system with long and short-term planning, monitoring, accounting, and reporting. Finally, it discusses day-to-day financial management including client appointments, payments, budgets, and cash collection. Sound financial management, especially cash collection, is emphasized as essential for a practice's survival and growth.

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Jade Lavender
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57 views9 pages

Module 03 Lesson 01a Financial Management

This document discusses financial management and systems for architectural practices. It covers establishing a practice through initial funding sources and a business plan. It also discusses establishing a financial system with long and short-term planning, monitoring, accounting, and reporting. Finally, it discusses day-to-day financial management including client appointments, payments, budgets, and cash collection. Sound financial management, especially cash collection, is emphasized as essential for a practice's survival and growth.

Uploaded by

Jade Lavender
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Manuel S.

Enverga University Foundation


An Autonomous University
College of Architecture and Fine Arts

Module 03, Lesson 01a

THE BUSINESS OF
ARCHITECTURE cafa@mseuf.edu.ph
(042) 710-2830
MSEUFCAFALC

PP113 – Professional Practice 03


THE BUSINESS OF ARCHITECTURE
MSEUF-CAFA

A. FINANCIAL MANAGEMENT
1. FINANCIAL SYSTEMS
A. Establishing the practice
B. Establishing a financial system
C. Day-to-day financial management
THE BUSINESS OF ARCHITECTURE:

FINANCIAL MANAGEMENT
MSEUF-CAFA

“CASH IS KING”
• is a colloquial phrase sometimes used in
analyzing businesses or investment portfolios. It
may refer to the importance of cash flow in the
overall fiscal health of a business.
• in all businesses, and architectural practices are
no exception– no matter how much profit you
make on paper, the practice will struggle for
survival if the cash doesn’t get to the bank.
THE BUSINESS OF ARCHITECTURE:

FINANCIAL SYSTEM
MSEUF-CAFA

ESTABLISHING THE PRACTICE


• Financial Adviser/Consultant
• Board finance comittee
• Initial cost resources
• the partners’/directors’ own money;
• borrowings, usually from a bank, but potentially from
other sources;
• a bank overdraft.
• Business plan (projections, source of income,
profits)
THE BUSINESS OF ARCHITECTURE:

FINANCIAL SYSTEM
MSEUF-CAFA

ESTABLISHING THE PRACTICE


• The bank will be principally interested in three
things:
• when it is likely to get its money back;
• the degree of certainty that it will get it back;
• what return it will get on the money it is lending.
THE BUSINESS OF ARCHITECTURE:

FINANCIAL SYSTEM
MSEUF-CAFA

ESTABLISHING A FINANCIAL SYSTEM


• A practice’s financial management system needs a
number of components:
• Long-term plan
• Annual business plan
• Monthly forecasting and monitoring
• Monthly management account
• Cash collection
• Bank reconciliation
• Weekly monitoring
• Daily monitoring
• Other reports (Annual audit,Tax, & Bank reports)
THE BUSINESS OF ARCHITECTURE:

FINANCIAL SYSTEM
MSEUF-CAFA

DAY TO DAY FINANCIAL MANAGEMENT


• Appointments
• Client credentials/records
• Financial reference
• Documentations
• Initial payments
• Payments
• Fees, method of compensation
• Payment schedule
• Architect’s Guidelines (UAP Doc. 210)
THE BUSINESS OF ARCHITECTURE:

FINANCIAL SYSTEM
MSEUF-CAFA

DAY TO DAY FINANCIAL MANAGEMENT


• Key financial performance indicators
• Financial budgeting/reporting by project
• Resource allocation and budgeting
• Cash collection
THE BUSINESS OF ARCHITECTURE:
MSEUF-CAFA

CONCLUSION
It is worth repeating the observation that, while making money is
frequently not the reason that architects go into practice, poor
financial control is often the reason they go out of business.

Profit is essential as it ensures the practice will continue to exist


and grow in the future, and sound financial management,
particularly in respect to collection of cash due, is of fundamental
importance.

It is also extremely important to take care about who the practice


works for – a client who is difficult to work with, who wants to pay
low (or no) fees and who is difficult to part from their cash for work
properly undertaken may well be a client not worth having, no
matter how good the design opportunity is.

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