Management for Design recently conducted a study with business leaders in the AEC and creative sectors to review how well their finances are managed. The results provide insights into how other firms are tracking and provide some benchmarks against which you can measure your own financial management success.

Our findings indicate that:

• 50% of respondents have a positive, yet inconsistent cash flow
• 25% of respondents have budgets but they don’t really adhere to them
• 25% of respondents regularly review their balance sheet ratios and use them in their decision making
• 12.5% of respondents have no project costing system in place
• 50% of respondents do not know their project specific profit margins
• 25% of respondents said their financial data is not easy to interpret and doesn’t add value to their business.

As a business leader, ensuring your financial data is consistently updated, tracked and analysed makes a dramatic difference to the value it can bring to your business. If finances are not consistently managed, it can quickly become difficult to stay in control of your cash flow, financial position, balance sheets, budgets, future forecasting and resources.

Reviewing information on a regular basis and making sure it is set out in a way that is easy to interpret is essential to making effective and informed decisions about the future growth and success of your business. Having an effective project costing system also allows you to differentiate between direct and indirect labour costs on a project by project basis — ultimately assisting business leaders to make changes in the workplace where necessary to maximise profits.

While finance isn’t the heart of your business, it is the blood that flows through every part of it. Having full control of your finances makes all the difference in the success of your business. Don’t let your finances get lost among the day to day operation of your business — take the reins and set up processes that make it easy to manage your cash flow, set up budgets and accurately forecast to maximise your future success.