ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Financing An Architecture Practice In Nigeria 1.0.Introduction 2.0.Architectural Practice in Nigeria 3.0.Financial Architectural Practice in Nigeria The Cash Cycle 4.0.Managing Cash Flow 5.0.Cash Flow Control 6.0.Conclusion

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Introduction Due to the Independence of Nigeria in 1960, an upward and forward trend in architectural practice has been resulted at. Nigeria is a developing country and her building practice is still grappling with a lot of inherent challenges, ranging from inadequate technical and managerial know-how to insufficient financial, material and equipment capital base (Oluwakiyesi 2011).

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Architectural Practice in Nigeria Architectural practices or firms may be structured either as sole proprietors, or corporations which is also referred to as limited liability companies. Each categories could be large, medium or small. Basically, the Nigeria architectural practice varies from the sole proprietorship practice through the partnership, the corporation, also known as the limited liability practice, the group practice, multi-disciplinary practice, to the professional design consortium.

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Financing Architectural Practice in Nigeria To stay in business, architects must practice at whatever profitability level, must fulfill promises made to clients and their own practice goals. According to Peter P. (2008), several factors determines the financial planning of an architectural practice Profitability: this is the ability to create an excess of revenue over expenses Liquidity: this is the ability to convert an asset to cash with relative speed Solvency: is the ability to meet financial obligations as they come due.

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Financing Architectural Practice in Nigeria The figure below shows the cash cycle. Fig.1. The Cash Cycle

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Managing Cash Flow

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Cash Flow Control The firm has more ability to control when it makes a disbursement than when it receives a cash payment. It can defer payment to vendors and other payees, reduce the draws or salaries of principals and, if necessary, borrow funds on a short-term basis. If cash projections indicate a continuing deficit, financing from other, longer-term sources may be needed.

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Cash Flow Control Following are some possibilities: Refinancing a major asset with a long-term note or mortgage Adding capital from existing partners, new partners, or shareholders Retaining additional corporate earnings rather than distributing all profits Deferring capital or other expenditures

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Cash Flow Control There are many indicators of financial performance and financial health. These ratios can be useful in establishing the need for working capital, assessing productivity, managing overhead and project expenses, establishing fees, and seeking credit. It is explained in the figure below Fig.2 : Working Capital = Current assets – Current Liabilities

ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria ARC 807: Professional Practice and Procedure Department of Architecture, Federal University of Technology, Akure, Nigeria Conclusion Sound management of project expenses requires planning these expenses before they are incurred (creating a project budget and work plan), monitoring revenues and expenses as the project proceeds, and taking corrective action when actual performance varies from the plan.