How much cash should an architecture firm keep?

An architecture firm bills fees by project phase or percent complete, usually monthly. Clients and developers often pay in 45 to 60 days, and some wait on their own financing. Staff are paid twice a month, so the firm carries months of work before it is paid.

Payroll per run, all-in $ How often you run payroll Fixed bills per month (rent, loans, insurance, software) $ Days your customers take to pay, on average days Cash in the bank today $

Minimum to keep

Two payroll runs plus one month of fixed bills

Comfortable level

Covers costs while you wait for customers to pay, plus one month

Weeks your cash covers

If no customer paid you

The starting numbers are an example. Replace them with yours.

How cash moves in an architecture firm

Fees are billed as phases progress, often a month after the work.
Developer clients may pay when their loan draws come in.
Consultants like engineers are often paid before the client pays you.
A project on hold stops billing while the staff on it still get paid.

Why the usual rule falls short

Two firms each bill $80,000 a month. One bills monthly by percent complete with 30-day terms. The other bills at the end of each phase on 60-day terms. The second can carry three months of salaries on a single project.

How the calculator works

Result	Formula
Minimum to keep	2 × payroll per run + 1 month of fixed bills
Comfortable level	Monthly costs × (days to collect ÷ 30 + 1)
Weeks your cash covers	Cash ÷ weekly costs

Get this done for you every Monday

One Page CFO reads your QuickBooks, builds your 13-week cash forecast and your one-page report, and a CFO checks both. $500 a month.

Check if I fit →

Also for architecture firm owners, see the architecture firm monthly financial report.