Fees drawn down, work in progress under control

The finance question in a design practice is timing

The fee is agreed at the start. The work runs for months. The team is paid every month regardless. So a practice can win good work, deliver it well, and still spend the year wondering where the money went.

The answer is almost always sitting in work in progress. Time spent, value earned, nothing invoiced yet.

What we do

Project and stage reporting. Fee allocated by stage against time actually spent, so an overrun is visible at the stage it happens rather than at the end of the project.

Work in progress and unbilled time. Measured monthly, chased, and turned into invoices. This is usually the single biggest change in the first year.

Cash weekly. Twelve weeks ahead, with stage invoicing and payment timing built in.

Resourcing against the pipeline. What the practice has committed to deliver, and whether the people to deliver it are there or over committed.

The fixed cost base, stated plainly. Professional indemnity, practising costs, software, premises. What the practice has to earn each month before it earns anything.

The statutory work. Year end, corporation tax, payroll and VAT, prepared and signed by our qualified accountants.

Fee pricing you can defend

Most practices price the next job from the last one. That works until a job goes badly and nobody can say why, because there is no record of what comparable work actually cost to deliver.

Once fully costed time by project exists, fee conversations change. You are not guessing at a number, you are pricing against evidence, and you can tell a client what the scope change will cost with a straight face.

Who this is for

Architects, chartered surveyors, building surveyors and related design practices turning over £500k to £5m across Surrey, Sussex, Kent and the South East. Practices where the principals are still doing the fee estimating, and practices carrying more work in progress than they would like to admit.

The shape of the monthly pack is set out on the management accounts page. If you would rather start with something that costs you nothing, The Outside View is a written read of the practice built only from public sources.

Common questions

How should an architects practice track work in progress? By project and by stage, comparing the fee allocated to each stage against the time already spent reaching it. A practice working to the RIBA stages has a natural structure for this, because the fee is usually agreed stage by stage. The number that matters is how much work has been done but not yet invoiced, because that is cash the practice has already paid its team to produce.

Why does a profitable practice run short of cash? Because profit is recognised as the work is done and cash arrives when the stage is invoiced and paid. A practice can be profitable on paper and still be funding several months of salaries out of its own balance sheet. AI Finance Partners forecasts cash weekly for twelve weeks ahead so the gap is visible before it bites rather than after.

Are fixed fees or percentage fees better? Neither is better in the abstract, and most practices run both. What matters is whether either one is priced against what the work actually costs to deliver, which requires knowing the fully costed time spent on comparable projects. Very few practices can produce that, which is why fee decisions tend to be made on instinct and last year's number.

Do you handle professional indemnity and the rest of the fixed cost base? We do not arrange the cover, but we make sure it is in the numbers properly. Professional indemnity, practising costs, software and premises are a substantial fixed base in a practice of this size, and knowing what that base costs each month is what tells you how much fee income the practice has to win before it earns anything.