02 Mar 2017 / by David Rourke / in Blog
Managing the Year-End Buying Crunch
Tell us if you’ve heard this one before: “The good news is that we have additional funding. The bad news is that we have to spend it by the end of March!” Ahh, the end of the budget year can create any number of challenges, but none generate mixed feelings like the last minute discovery of extra funds. Whether created by an unexpected source of outside funding or by an excess budget amount, the sense of “use it or lose it” causes a strange dichotomy between the joy and panic.
ONN and RTPS, partners on the ONN Purchasing Program, are happy to offer the following tips for getting through the year-end spending crunch:
Understand Your Policy Requirements.
Whether driven by outside obligations (such as the Broader Public Sector Procurement Directive) or by your own internal policies, know what process you need to go through for whatever type of purchase you’re considering. It’s possible that the purchase requires a full Request for Proposal process (e.g., consulting services). Or, perhaps you simply need three quotes to meet minimum requirements. It‘s always a challenge to fulfill a formal selection process in a schedule compressed by funding deadlines.
It’s equally important to understand when you don’t need to follow a formal process. Racing to get three quotes can be a waste of time and effort for you and the suppliers if it’s not absolutely required. If you have a preferred supplier system and you are not bound by outside requirements, you are likely better off to use a managed single-source approach when time is of the essence. Even if you are subject to regulatory requirements (like the BPS Directive) consideration may be given to rush situations.
Ultimately, you need to know your options and use the best approach to meet all of your objectives, including end-of-year funding conditions.
Stay True to Your Standards.
That brand of laptops may be a great price and (perhaps more importantly at this time of year) they’re available and can be paid for prior to the March 31 deadline. But if your organization’s standard is a different brand, those machines may not be such a great deal after all. Once you find out you can’t set them up, provide support for them, or use your existing power cables, you may be rethinking your purchase.
Be careful before you abandon your specifications, standards and selection criteria just to meet the urgent timeline associated with the year-end funds. “Pennywise, pound-foolish” can instead become “deadline-wise, quality-foolish.”
Be Creative; Consider Options.
It may seem obvious, but many organizations forget to push back and explore alternative options when faced with irrational funding deadlines. If the funder is made aware of the challenges created by the imposed deadline, there may be the potential to extend the funding timeline or find create work-arounds. Similarly, finance teams may find ways to carry extra funds over to the next period (fiscal year, for example) without any real impact.
One of the more common uses of last-minute funds is consulting services. There is almost always a potential consulting (research, strategy, process, etc) project that had been shelved until funds were available. With most consulting engagements, there are often natural breaks or checkpoints that can be inserted into the project workplan. If you can align a significant project milestone with your funding deadline, you can ask the consultant to provide an invoice for the completed portion or phase of the project.
Don’t be afraid to get some help. Whether it’s someone to help find suppliers, run requests for proposals or manage an expedited process, getting professional support can help ensure that funds are spent as effectively as possible in a tight timeframe.
Better Yet! Become an ONN member.
ONN members stay connected to the services, resources, and tools- created for nonprofits by nonprofits- that can help you get your work done (and with fewer headaches!) Invest in your network— become an ONN member.
There’s no doubt: it’s great to find out that extra funds are available at the end of the year. If you do, spend them if you can do so effectively for your organization.
The year-end spending crunch doesn’t need to be stressful! Contact the ONN Purchasing Program at firstname.lastname@example.org if you have any questions or need some support.