Interior Design Procurement: Agent, Principal, and Why Everyone Is Confused

Procurement sits at the intersection of creative work and commercial reality, it can introduce conflict or mistrust into the client-designer relationship. It is also, for many practices, the most financially significant part of what they do - and the least well understood, legally and operationally.

Nearly 30 years ago (when I started practising 👵🏻) the picture was relatively straightforward: designers operated as principal, clients had no meaningful access to trade pricing, and the margin on goods was a legitimate and largely unquestioned part of how a practice sustained itself.

That world no longer exists.

Clients now arrive at first meetings having already priced the sofa on the trade website. Legislation has tightened considerably. Our governing bodies expect transparency and client-centric behaviour as a baseline, not an aspiration.

And yet, in the vacuum left by all this change, genuine confusion has flourished. This week, a highly experienced designer raised concerns that processes endorsed by our professional bodies may expose practices to Anti-Money Laundering jeopardy. That is not a fringe concern - it is the kind of thing that ought to concentrate the mind. This post is my attempt to map the territory clearly. 

1. The foundational legal question: Agent or Principal?

This is where any procurement teaching must begin, because the answer shapes everything downstream - contracts, liability, financial treatment, and how the designer charges.

Agent, advising on FF&E to be supplied by others 

Principal, supplying the FF&E directly to the client

Most designers operate a hybrid model, depending on the project and item.

Agent Model

When acting as agent, the design practice acts on behalf of the client and with the client's authority. The client must be expressly named as the customer in supply contracts with all FF&E suppliers, or it must otherwise be made clear that the actual customer is the client, not the practice.

Under the agent model, all trade discounts belong to the client.

When a designer acts as agent, they have a fiduciary duty to their client - they are acting in the client's interest, not their own. The client is trusting the designer to obtain goods at the best available price and to be transparent about what those goods cost. The BIID recommends 15% as the standard administration fee for professional projects.

The SBID adds a useful caveat on the 15% handling charge: they do not recommend applying the fee to any single transaction where the client charge would exceed the discount provided - it should not cost the customer more to receive the discount than to purchase at full retail prices.

Furthermore, accepting an undisclosed commission from a supplier when acting as agent may constitute a breach of the Bribery Act 2010. For example, a supplier - knowing that the designer has influence over where the client's money goes - pays the designer a commission for directing that business their way, and the client does not know this is happening.

That is the textbook definition of a secret profit made by an agent at the principal's expense, and it engages at least three distinct legal frameworks simultaneously, including the Bribery Act.

The Bribery Act 2010 is concerned with secret financial advantages. The relevant section is not about bribing a public official - it covers the broader offence of a person in a position of trust receiving a financial advantage that is not disclosed to the person they are supposed to be acting for.

The offence does not require proof that the designer made a worse decision for the client as a result. The mere receipt of an undisclosed financial advantage in that position is sufficient. The maximum penalty is ten years' imprisonment. 

The BIID Code of Conduct

The BIID is explicit on this. If the designer as agent benefits from a commission and it is kept secret, it is unlawful. A designer found to have operated this way would be in breach of the Code and subject to disciplinary proceedings, which in a professional community of this size has significant reputational consequences independently of any legal action.

Separating Client Monies

When operating as agent, client money should never touch your business account. The moment it does, the formal separation that underpins agent status begins to erode.

When acting as agent, funds must be held in designated client accounts, not commingled with business revenue. This is not simply good practice - it is a legal necessity.

The reason is straightforward: if the designer is genuinely acting as agent, the money they hold to pay suppliers belongs to the client, not to them. It must therefore be demonstrably separate from their own business funds at all times. If it sits in their general business account, it is legally indistinguishable from their own money - which means they have, in effect, taken ownership of it, which pulls them out of agent mode and towards principal.

What formal client account structure looks like

In order to avoid any questions about your operating status - and to steer clear of UK Anti-Money Laundering (AML) regulations - by far the safest way of operating is to arrange for your client to pay the supplier direct from their bank account.

If that can’t be achieved, then you can robustly maintain agent status with a dedicated client account - a separate bank account, distinct from the business current account, used exclusively to hold client funds. Several models exist:

One pooled client account with a ledger A single separate account holds all client money, but the designer maintains a clear internal ledger showing exactly how much of the balance belongs to each client. This is the model used by solicitors and estate agents under their professional regulatory frameworks. It requires disciplined bookkeeping - every client payment in and every supplier payment out must be recorded against the correct client - but it is entirely workable for a small practice.

One account per client or per project A separate account is opened for each client or project. More administratively demanding but produces a completely clean audit trail. Some banks make this difficult because of the overhead of opening multiple accounts; business banking products designed for this purpose (such as those offered by Tide, Starling for Business, or Mettle) can make it more practical.

Third-party managed accounts Solutions such as specialist FF&E procurement accounts offer compliant and transparent management of client money, with clear segregation of funds, audit trails, and interest calculations - allowing designers to focus on creative work while ensuring regulatory compliance. This is the most robust option for designers handling significant FF&E budgets but comes with cost and administrative overhead

Separate pots within one bank account are not formally compliant; a dedicated client bank account is the correct minimum standard; a third-party managed account - via providers like Dospay https://www.dospay.co.uk/ - is best practice for significant projects.

The Agent Model and VAT

There are two distinct VAT questions in every agent procurement:

1. The goods themselves If the designer is a genuine disclosed agent - the client contracts directly with the supplier, the invoice is in the client's name, money passes through a separate client account - then the goods are entirely outside the designer's VAT picture. They do not charge VAT on the goods value when they pass the cost on, and they cannot reclaim VAT on them either. They are a disbursement.

HMRC's eight conditions for disbursement treatment require, among other things, that the designer acts as the client's agent, that the client is the user and beneficiary responsible for payment, that the client knows the third-party supplier, that the exact cost is passed on without markup, and that the costs are listed separately on the invoice.

2. The designer's own fee The designer charges a separate percentage fee for administering the procurement - sourcing, ordering, chasing, quality control. That fee is the designer's taxable supply of services. If they are VAT-registered, they charge VAT on it and - separately - they can reclaim input VAT on any VAT-bearing costs incurred in delivering that service: time, subscriptions, overheads.

The reclaim is not on the goods. It is on the costs of running the practice that supports the procurement service.

Principal Model

As principal, the designer sells directly to the client and is responsible for the supply, procurement, delivery, and installation of all FF&E. The designer needs the company structure in place to deliver that product or service and will be liable for everything that passes through them.

As principal, the designer can generate significant interest on client funds and may not be required to separate client money from their own. Conversely, the designer is responsible for everything.

This method is preferable for low-risk, high-margin items; for bespoke, high-risk, or low-margin items, the designer carries significantly more protection purchasing as agent.

The critical transparency obligation Designers must be honest with clients about the model they are using, document the arrangement properly, and ensure that any financial arrangements - particularly around trade discounts and client money - are handled in accordance with best practice.

The letter of engagement must specify the model being used, and explain exactly how it will be applied.

2. The procurement process: stages and operational requirements

Whichever model your practice adopts, the operational process follows a recognisable sequence. Here is a consolidated best practice version drawn from multiple sources:

Estimate to supply → client approval → pro forma invoice for full supply amount → client pays in full* → purchase orders placed → goods delivered → VAT invoice issued

Stage 1 - Specification lock Before any orders are placed, all specifications must be confirmed: dimensions, finishes, quantities, lead times, pricing, and vendor terms. Even small errors at this stage can result in long delays or expensive reorders. This information is conveyed to the client via the Estimate.

If the estimate is the first document in the chain, it is also where your handling charge percentage, your payment terms, and any relevant disclaimers about lead times or availability should appear - this is the document that will be relied upon if there is later a dispute about what was agreed. This confirms the position your business communicated - in exactly the same terms - in the letter of engagement.

Stage 2 - Client approval and deposit Confirming that the client would like the designer's assistance with procurement services and solidifying full-service contract terms must precede any orders. Payment of client deposit should be received before purchase orders go out [*Note: in my practice, my terms were payment in full in advance. As soon as an order is placed, the design practice becomes liable for the full amount, if the client changes their mind, the design practice must still cover the cost of purchase]. At this point, the practice submits a Pro Forma Invoice. This could be the point to conduct supplier due diligence - taking whatever steps you can to investigate the solvency and reputation of the business you’ll be buying from.

Stage 3 - Purchase order creation and placement Detailed purchase orders are essential - they are the designer's best protection when a custom piece arrives and something is wrong. Larger furniture pieces or items with long lead times - particularly custom-designed or bespoke pieces - should be prioritised, as they will take significantly longer to receive than smaller accessories. At this stage the practice sends the supplier a Purchase Order as agent / as principal.

Stage 4 - Order tracking After orders are placed, tracking becomes a vital ongoing task. Every item should be tracked against the purchase order, with dates recorded: date ordered, date shipped, date received, date delivered and installed. If your business is running internal systems (ie not using a platform like Programa to manage procurement) at this point you’ll need a Project Mastersheet.

Stage 5 - Receiving, inspection, and storage This is the stage most frequently underestimated by independent designers. Items may arrive at different times and cannot all go straight to site, particularly if the build is running late. The options are:

• Self-managed receiving - practical only for small projects or if the designer has suitable premises, with insurance.
• Third-party receiving warehouse - professional receiving warehouses cross-reference every arriving item against the FF&E list, carry out quality control checks, and notify the designer immediately of any issues so they can be rectified quickly. This is the recommended route for any project of scale. It makes snagging and installation substantially easier and is particularly valuable when a build programme runs over and suppliers want to deliver items that would otherwise sit on-site or incur supplier storage charges. 

Stage 6 - Delivery coordination and installation Clear communication is essential to plan ideal installation dates and ensure the site is clear of construction and ready for installation.

Stage 7 - Snagging, returns, and reconciliation Final reconciliation of all invoices, purchase orders, and billable hours, alongside snagging any items that arrive damaged or incorrect.

*NOTE: Payment in Full Before Procurement - Invoicing for the full amount before placing orders - a legitimate and arguably more financially disciplined approach than deposit-plus-balance. As principal, once a purchase order goes to a supplier, you are committed, and a deposit that does not cover the full liability leaves your business exposed to a funding gap if the client delays or defaults on the balance.

This is particularly sound under the principal model, where the liability is entirely yours. You cannot partially commit to a supplier. 

3. Procurement fees: what the industry charges

Procurement/FF&E handling fees are typically 10–20% of trade price; many designers do not disclose exact trade costs. The 15% administration fee is the BIID benchmark for agent-model commercial projects. The SBID guidance is consistent with this.

Under the principal model, industry average markup is around 35%, with a range of 30–50%.

This is worth treating as three distinct questions because the considerations are different in each case, though they are connected.

A. Arriving at the right fee structure

The first decision is not actually about the percentage - it is about which model is appropriate for the project and the specific items within it. That decision then largely determines the fee structure, because the two models have different commercial logics.

Under the agent model, the fee is compensation for time and expertise spent administering a procurement process on the client's behalf. The correct way to arrive at it is therefore to think about what that administration actually costs in time: estimating, invoicing, ordering, chasing, quality control, managing returns, coordinating delivery. The BIID benchmark of 15% on trade price is a starting point, but it is not a universal answer. A project involving twenty bespoke items from specialist suppliers across a six-month programme warrants a higher fee than one involving ten standard pieces from three suppliers with short lead times. The percentage should reflect the complexity and duration of the work, not be applied reflexively.

A useful internal discipline is to estimate the number of hours the procurement is likely to consume, multiply by your internal hourly rate, and check whether the percentage fee exceeds, meets, or falls short of that figure. If it falls significantly short, the percentage is probably too low. If it substantially exceeds it, you may be overcharging relative to the work involved - which, under the agent model, creates the kind of tension with the client's interest that the Bribery Act provisions are designed to address.

Under the principal model, the fee logic is different. You are taking on liability, tying up capital, and absorbing risk - and your margin needs to reflect that, not just your time. The 30–35% markup range cited earlier is an industry norm, but again the right figure for a specific project depends on the risk profile of the items involved. Bespoke pieces from newer suppliers warrant a higher margin than standard pieces from long-established manufacturers, because the risk of non-delivery, damage, or quality failure is higher. Your margin is partly compensation for the administrative work and partly a risk premium.

Mixed model projects - agent for some items, principal for others - require discipline about recording which items fall under which model and ensuring the fee structure for each is correct. This is where clear documentation at the specification lock stage becomes essential.

B. Presenting the fee to the client

The most common failure here is presenting the fee as a percentage without explaining what the client is actually buying. A client who is told "we charge 15% on procurement" may accept it without understanding what that covers, which creates the conditions for later dissatisfaction when they realise they are paying £3,000 for what they perceive as paperwork.

The presentation should do three things.

Explain the work the fee covers. Not vaguely - specifically. Estimating, invoicing and vetting suppliers, creating and issuing purchase orders, managing lead times, coordinating delivery schedules, receiving and inspecting goods, managing any remedial process for damaged or incorrect items. When a client understands the operational complexity of procurement, the fee becomes reasonable.

Be transparent about the financial model. Under the agent model, the client should understand that trade discounts belong to them, that the designer does not profit from the goods themselves, and that the fee is the sole financial benefit the designer receives from the procurement service. Under the principal model, the client should understand that the designer is buying the goods and reselling them, that the price they pay includes a margin, and that this margin reflects the designer's liability and capital commitment. Neither of these conversations is uncomfortable if handled straightforwardly - but both can become uncomfortable if the client discovers the structure later without having been told.

Show the value of the service relative to the alternative. A client managing their own procurement from trade suppliers - assuming they could access them - would need to open accounts, manage orders, chase deliveries, inspect goods, and handle any problems themselves. Most cannot and would not. Framing the fee against this counterfactual is more persuasive than any percentage justification.

The How We Work document is the natural place for this framing to begin, with the fee proposal, letter of engagement, and the onboarding pack, reinforcing and detailing it. By the time the client receives a pro forma for a specific procurement programme, the structure should already be familiar to them.

C. Making it watertight in the letter of engagement

Several things must be explicit rather than implied.

The procurement model must be named. The letter of engagement should state clearly whether the designer will act as agent, as principal, or potentially as both depending on the item. It should not leave this to be inferred from the fee structure or from the purchase order format. The BIID and SBID are both explicit that the contract must specify how FF&E will be sourced and supplied.

The fee basis must be defined precisely. Not just the percentage, but what it is applied to. Under the agent model: is it applied to the trade price exclusive of VAT? Inclusive? Is it applied to the supplier's invoice value including delivery charges? Each of these produces a different number. The client cannot meaningfully consent to a fee they cannot calculate, and you cannot enforce a fee that is not clearly defined.

Client money handling must be addressed. If you are acting as agent and holding client funds, the letter should state how those funds are held - in a separate account, not commingled with business revenue - and what happens if a supplier requires payment before the client's funds have cleared. NOTE: In my business I always insisted on cleared funds and full payment before placing orders.

The deposit or payment-in-full requirement must be stated. If your model is pro forma for full amount before orders are placed, this needs to be in the letter of engagement as a condition of proceeding with procurement. Without it, a client who refuses to pay in full before ordering can argue that you placed orders prematurely, or that you should have proceeded on partial payment.

Cancellation and variation terms must be included. What happens if the client changes their mind after a purchase order has been placed? Under the principal model, you may already be contractually committed to a supplier with no right of return. The letter of engagement should state that once a purchase order is issued, the client is liable for the full cost of the item, including any cancellation charges imposed by the supplier (likely to vary significantly between standard and bespoke products). This is the clause that protects you when a client decides mid-procurement that they want a different sofa.

The handling of damaged or incorrect goods should be addressed. Under the principal model, your liability to the client is clear - you supplied the goods, you are responsible. The letter of engagement should explain the process: goods will be inspected on receipt, damage will be reported to the supplier within the supplier's stated timeframe, and remedial action will be pursued on the client's behalf. This manages expectations and establishes that there is a process, without creating an open-ended liability for circumstances outside your control.

Supplier insolvency risk should be acknowledged. It is worth including a brief clause that notes the designer will exercise reasonable due diligence in selecting suppliers but cannot guarantee against supplier insolvency, and that in the event of supplier failure the designer will pursue available remedies on the client's behalf. This does not eliminate the client's potential loss, but it demonstrates professional competence and limits the designer's exposure to a claim that they should have foreseen and prevented the problem.

The letter of engagement for a project that includes significant procurement is doing substantially more legal and commercial work than one covering design services alone. Many designers use a single template for both, which means the procurement provisions are either absent or cursory.

4. Delivery Systems

Own-system track 

Latter this summer, I will release a new programme: the White Label Studio which includes (among other things) the full document suite of a self-managed workflow: the estimate and invoicing system, order coversheets, and agent and principal order templates, plus project mastersheet.

Sign up here to find out more nearer the time.

I am not a lawyer, and nothing in this post constitutes legal advice.

The frameworks and systems described here address the operational layer of procurement - they are not a substitute for professional legal review of your specific contracts and processes. Given that the legal landscape around procurement is genuinely contested, and that some accepted industry practices carry risks that are not yet widely understood, that review is not optional.