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Accounting for interior designers can be complex — but it doesn’t have to be. Learn more about streamlining procurement, developing a budgeting process, and the difference between cash and accrual accounting.
The interior design accounting process is unique.
The interior design business is a distinct combination of artistic expression and project management. While owners of other types of businesses might have complete control over their work, interior design firms must rely on an extensive network of professionals to execute projects.
Even small interior design firms require collaboration with various specialists, including construction contractors, architects, plumbers, and electricians. Reporting revenues and expenses can be challenging as design projects increase in scale. That’s why efficient bookkeeping is essential to ensure all costs get paid — while still making a profit.
Mastering the interior design procurement process is critical.
The procurement or purchasing process begins once a design is created and approved by the client. This process brings the design to life and requires weeks or months to find, customize, and purchase items such as furniture, fixtures, flooring, drapery, and accessories.
Mastering the interior design sourcing and procurement process is crucial to ensuring client satisfaction, saving time, and minimizing expenses. It may not be the most satisfying part of the job, but it is critical to staying within budget, meeting deadlines, and obtaining your client’s most desired items.
Some of our best tips for interior designers include:
Set Clear Client Expectations
First and foremost, communicate clearly with your client about all items included in the contract. Ensure your client understands what to expect, including services rendered, deliverables, and how you will bill additional procurement work (if required).
Establish a Solid Interior Design Procurement Process
Take time to create a comprehensive procurement process or system you can repeatedly use for different projects.
Some suggested steps include:
- Confirm with the client that you offer procurement services and include them in the contract.
- Finalize the list of items required following completion of the design process.
- Submit comprehensive pricing requests to all vendors and identify what items are unavailable or outside the project budget.
- Replace any unavailable items with client-approved substitutes.
- Create vendor purchase orders for all approved items and confirm order specifications after final proofs are submitted. Use a purchase order system to streamline operations, if possible.
- Place orders, starting with customized furniture and other items that require extra delivery time.
- Arrange delivery of items and confirm that each item was received. Check for any damaged or incorrect items.
- Reconcile all financial records to the client, including purchase orders, invoices, and fees.
Develop Relationships with Reliable Vendors
Get to know your vendors by familiarizing yourself with their inventory. This helps establish trust and speeds up the procurement process. In addition, you can earn discounts based on repeat purchases and generate referrals.
Use a Budget Template
Create a standardized budget template to use repeatedly for different projects. Refine it over time using budget best practices to ensure it works optimally for your business.
Another option is to use a software solution that includes accounting, billing, and budgeting tools in one application.
Customized for interior designers, Studio Designer enables you to manage projects from start to finish. Features include an all-in-one project management system and fully integrated time billing, product sourcing, and proprietary accounting tools.
Consult With Your Accountant
Running your processes and procedures by your accountant optimizes your interior design billing practices and ensures all relevant financial statements and financial reports are easily accessed during tax time. In addition, a professional can suggest financial tips and project accounting software that save time and money, giving you extra energy to focus on the design process.
Choose the best accounting process so you can focus on design.
The interior design industry can be complex from a financial perspective. At the same time, it is a highly artistic endeavor that requires intuition, inspiration, and attention to detail.
Free yourself from day-to-day accounting issues so you can focus on bringing your designs to life. Contact us for a free consultation to learn how to take back control of the accounting process so you can focus on maximizing your creative potential.