Proven best practices for architecture, engineering & consulting firms
In today’s dynamic business landscape, architecture, engineering, and consulting companies are experiencing rapid transformation. The need for agility, coupled with intensified competition and client demands, has put significant pressure on profit margins. As a result, firms must find ways to optimise their financial processes while delivering projects on time and within budget.
Enterprise Resource Planning (ERP) systems are transforming financial operations. By integrating project management with financial processes, ERP enables a unified view of an organisation’s data, enhancing decision making. Automation of financial tasks reduces manual errors and streamlines processes, leading to faster billing and improved cash flow.
This guide provides information on financial management best practice, process improvement recommendations and supplementary ERP solution information. All designed to help you to improve your financial management.
Optimising financial processes
This section focuses on four key financial processes that can enable more seamless operations and are often a priority when implementing a new ERP or financial management solution.
1. Month end
The month end process should be smooth and fast. It starts with an automated
process for revenue recognition and engaging with project managers. It should be
done on the first and second day of the month. Usually, a well defined month end
process with a supportive solution should not take more than 3 to 4 working days.
2. Invoicing & collection
Cash is dependent on your ability to manage your WIP and your Accounts
Receivable (AR). It starts with time sheet submissions and a defined process for
time & expense approvals followed by invoicing regularly, with a process in place
for collecting these payments.
3. Purchasing & costs
Controlling the cost process from the request, until the vendor is paid will help you
manage unforeseen costs. Purchase Orders should be a pre-requisite for external
project purchases and a solid process for approval and payment of the purchased
services for all costs.
4. Proper reporting
Many companies budget as part of their yearly planning, and then potentially
review and update quarterly. This helps – however, proper finance management
requires, at any point in time, to have a view of current performance as well as
future performance in order to make decisions. This may be done on a regular
monthly basis, or it may be automated so that it is just a natural part of operational
insight.
The foundations of sound financial management
Finance has the important task of supporting the organisation in delivering profitable projects to clients. Therefore, financial management is often a driving factor or key consideration when implementing a business or ERP solution.
Consider these four areas as the foundation for sound financial management:
1. Manage working capital
First, finance must manage working capital and improve cash flow. Without this control, the company may run short on capital and not be able to manage growth or daily execution.
2. Control the costs – to secure the bottom line
Second, secure costs through proper budgeting and forecasting. Then, in order to control costs, introduce better purchase processes with approval flows.
3. Manage month end
Third, manage month end in as little time as possible. With a fully integrated ERP solution, month end can be executed within 3-4 working days leaving more time in the month to manage other business.
4. The right information for decision making
Finally, ensuring the company has the right set of information in terms of reports and dashboards is key.
Architecture, Consulting & Engineering companies are working in an industry characterised by rapid change and increasingly demanding clients. This has made it more important than ever to deliver projects on time and within budget, while ensuring efficient financial processes.
These steps are just the start. By going beyond these foundations, you can establish proper processes throughout your organisation, manage working capital with an optimised order to cash process, and simplify income statements and month-end reporting.
All these processes add up to help create a leaner, more adaptive organisation. And with the right partner, you can streamline your financial management – giving your whole business the agility to outmanoeuvre the competition.
