Financial Workflow for Interior Design Clients

Today I am going to share with you the financial workflow that I use for interior design clients. This is just one way of doing it and many interior designers do it differently - and some probably do it the same. In fact, please share your workflow in the comments!

Contract & Retainer

First, when my clients sign my contract they also give me a retainer check - this is to cover my business if they stop paying their time billing invoices. This has never happened to me, but if a client were to become delinquent on their payments I would stop work on their project. That’s my policy and it exists outside of me - meaning that it’s a business policy that cannot be changed, altered, or exempted - no matter how much my human emotions my try to sway me. (No client sob stories or it’s coming next week - I need to protect my business and won’t work without being paid.)

Time Billing

As I mentioned in last week’s post: How Often to Bill for Interior Design Services, I bill my clients every two weeks for time billing (my hourly fees). Reimburseables get billed once a month and sent with the time billing invoice. So that is two invoices per month for clients and my design fees.

I send the time billing invoices through my accounting & project management software which emails them to my client. On the invoice, it says how long they have before the invoice is overdue. I’ve not had a problem with people paying their invoices because my process and policies are clear from the start. However - like everyone I have had clients question my rates and how “long” it takes. This is rare and I attribute that to being very clear and transparent with my clients from the start.

Clients pay the invoice by sending a check and I don’t accept credit cards. Once I receive their check I go in and mark the invoice paid inside my accounting & project management software.

So that is what happens with time billing.

Product Purchases

Product purchases are a little different. After the design presentation, I try to send as many “proposals” as I can to the client in one email package - this may be overwhelming to some clients and they may prefer that you send in a more digestible package. This depends on the client and the project. But for full-service design I like to get the ordering started quickly - especially for items with long lead times, that could go on backorder (like fabric) or sell-out, and one-of-a-kind items. So, pretty much everything. Waiting too long after the presentation can cause additional second-guessing as well.

Once a client approves the proposal AND sends a check (two steps to protect yourself!) I mark that paid and begin to cut Purchase Orders to the vendors. It is in your best interest to Get Paid First. Don’t let your business be a bank for clients.

Purchase Orders

Most of the time I send a check with the (very detailed) purchase order to the vendor. Most of the time they send me an invoice indicating that the item was paid or a deposit was received. Sometimes I’ll email a copy of the purchase order with a scan of the check to the vendor if time is important.

Then, once the item is received I turn that purchase order into a final invoice. You could send this to your client, but I always require 100% down payment on 100% of purchases so I don’t usually send a final invoice to the client, it’s just required to keep my books straight.

So there you have it, my financial flow for clients. It’s not complicated and it keeps everything organized and on track.

If you run an interior design business you’re not going to want to miss Peak Financial Week a free virtual event: