During any given week, I get multiple requests that sound something like this: “Can we spend $2,500 on xyz?” Or, “We need to buy abc and it’s going to cost $12,000.” Well, actually, that last one isn’t technically a request; it’s just a statement begging for an affirmative response.
My reply is almost always the same. What are our options? Is this the best solution given where we are today? Have we gotten other prices? What happens if we don’t spend the money? What’s our return if we do spend the money? Does it help bring in extra revenue? Does the expenditure save other costs? Does it meaningfully improve customer service? Why are you recommending we spend this money?
Often the person asking the question hasn’t given a moment of thought to any of these questions. The most typical and somewhat incredulous reply to my question is “We’ve been doing it this way for years”. For the record, “We’ve been doing it this way for years” is never an acceptable response to any CFO.
Afterwards, the requestor can usually be heard saying something like “Finance didn’t approve the request”. I guess that is factually accurate, but requests like the ones above don’t merit approval. So when the requestor says that they are “waiting for finance approval” the truth is that finance is waiting for the requestor to perform reasonable due diligence and come forward with thoughtful recommendation. In other words, present a business case for the expenditure.
Do you want a fast response to your request? Try walking into any CFO’s office with a request like this (preferably in writing). “I’m requesting an expenditure of $5,000. I believe this is necessary because it will reduce the number of calls coming into customer service by 10%. While we can’t eliminate any hard costs, it will give us more time to tackle other projects, specifically, improved reporting on trouble tickets. I’ve looked at other options and there are competing products that start at $4,000. While my recommendation isn’t the cheapest, it is the industry leader and our research indicates it is superior to any of its competitors. I think the company is better served by spending a bit more than going with the lowest cost solution.”
Let me assure you, this kind of request (depending on the actual dollar amount, budget, etc.) will get attention and be quickly approved. It tells “finance” that the person asking for the funds has both thought about the request performed reasonable due diligence. They are making a recommendation, not asking for permission! That’s a very important distinction. It’s so important, that I’m going to repeat it! Don’t ask for permission; make a recommendation!
When you seek to spend money, everyone knows that you want the answer to be “yes” so rather than make it difficult for someone to approve the request, why not make it easy? Not only that, if you are responsible for spending, it’s part of your job!
If you need help with your business, financial plans, or goal setting, please give me a call at (314) 863-6637 or send an email to And, remember . . .
your cash is flowing. know where.
Copyright @ 2008 Homza Consulting, Inc.