7 Ways to Improve Cash Flow in Architecture Practices
Managing cash flow is one of the most important financial functions for architecture practices. Here are 7 proven ways UK architecture firms can improve their cash flow.
Assess Client Fee Structures
Shorten Payment Terms
Forecast Cash Flow Weekly
Review Project Pricing Regularly
Tighten Project Scope Control
Use Cloud Accounting Tools
Work with a CFO or Finance Expert
Cash flow is the lifeblood of any architecture practice, and even profitable firms can struggle if cash isn’t flowing in and out at the right pace. From managing project-based income to navigating long payment terms, architecture practices face a unique set of challenges. Here are seven practical ways to strengthen your cash flow and support the stability and growth of your firm.
1. Assess Client Fee Structures
Rather than invoicing only at project completion, structure your contracts to allow for stage-based or milestone billing. This approach spreads income more evenly across the project lifecycle, reducing reliance on lump-sum final payments. Another option is to bill clients monthly, based on the work completed during that period.
2. Shorten Payment Terms
Review your standard terms and aim for 14–21 days rather than the traditional 30+. For larger clients or public sector contracts, where you must offer 30 days, monitor overdue invoices closely and follow up promptly.
3. Forecast Cash Flow Weekly
Use a rolling 12-week cash flow forecast to track expected inflows and outflows. This helps you anticipate potential shortfalls and plan for them, rather than react once cash runs low.
4. Review Project Pricing Regularly
Ensure your fees reflect the value and complexity of the work you’re delivering. Underpricing your services erodes margins and puts pressure on cash. Revisit pricing annually, or when entering new sectors.
5. Tighten Project Scope Control
Scope creep can quickly drain resources. Make sure additional work outside the original agreement is formally approved and billed, by regularly reviewing output against the agreed milestones. Don’t let goodwill become unpaid effort.
6. Use Cloud Accounting Tools
Leverage cloud-based accounting tools to get real-time insight into your cash position and to facilitate forecasting and scenario planning.
7. Work with a CFO
A Fractional or Virtual CFO can help architecture firms create cash flow strategies, plan for growth, and improve financial visibility, without the overhead of hiring in-house.
Pareto FD has over 20 years experience providing CFO Services for Architectural Practices. Book a free Discovery Call to discuss how we could help your practice improve cash flow and much more.
Want to see 5 more strategies?
Download our full guide with all 12 key strategies Architecture Practices can use to improve cash flow.
