Blog Post from Kevin Matheny, EANE Controller
You’ve spent countless hours scouring the internet, speaking to and/or meeting with potential new vendors, and have sat through numerous product demonstrations to settle on that new product or service that you have determined is necessary for your department. Your next, and hopefully last hurdle, is to justify the purchase of identified product/service to your finance department.
It’s been my experience that we finance professionals are programmed to say “No” when it comes to spending money on items or services that are non-recurring (discretionary). Issuing payment for monthly rent and health insurance are expected but non-routine expenses, particularly large capital expenses such as a new HRIS system, tend to elicit an automatic “No” reaction. I have an actual big, red “No” button that I use as my doorstop. It serves as my gentle reminder to be prepared when entering my office requesting discretionary funds as well as a source of amusement and ribbing from my colleagues (who pretend to hide or kick the “No” button out of the way as they enter my office).
So how do you go about changing that initial “No” reaction to the desired “Yes” response? By making sure that you fully prepare your discussion points ahead of time in order to best present your argument as to why this product or service is a must-have for your organization. The three talking points that I have detailed below should be included in those discussion points.
You should be able to articulate what the return on investment is projected to be from this investment of capital. Will there be cost savings associated with this purchase? This is not purely a financial proposition. The cost savings might be a direct monetary increase to the bottom line but could also be in the form of savings from increased production speed or capabilities or actual cost savings due to a decrease in associated man-hours needed to complete the process, especially if it automates processes that are currently done manually. Providing figures that show the projected cost savings are always a great addition to the argument in favor of funding.
You should also make sure you have identified and laid out the actual comprehensive dollar request. What is the initial capital outlay and what is included in that figure? What about the cost and ease of installation and migration of data? Also, are there any recurring expenses that are associated with the item or service such as continuing service contracts, an associated monthly cost, or renewal fees? These are all items that not only need to be considered at the time of purchase but as ongoing line items that need to be budgeted going forward.
My third recommendation is to show that you did your due diligence before deciding on a particular item or service. Provide the quote(s) that you received from vendors. Provide details surrounding your test drive of the competing products and that you were able to evaluate the features, content, and functionality of those items or services prior to settling on the one that you are presenting. Be prepared to talk about why this particular item, service, or platform was chosen above the competition (a must if it is higher priced than seemingly similar products).
If you are able to persuasively communicate the three items above, this should provide assistance when looking to circumvent the big finance “No” button that is ever-present and an integral part of the accounting professionals’ psyche.