Fiscal Year Spending Spree
Money money money money money. Show me the money. Oh yeah, the good ol’ June to July, end of fiscal year budget cycle. In June we spend up every last cent so we don’t lose it, and every July 1, we see that nice new budget appear in order to buy all the goodies we couldn’t get the previous month. It’s the only time of the year when we feel rich. Well, maybe for a day. And then project cycles hit, POs get pulled, and invoices come due. It sounded fun while it lasted.
Every higher ed tech manager knows that June/July fiscal years are the worst for us. By the time July rolls around, it’s too late to buy equipment. And having budgets end in June is too early to pay out POs for open projects. So, how should we handle this to be most effective as well as be better stewards of our institution’s resources?
Communicate: Accounting are people too. And they have their own deadlines. The best method to avoid wasteful spending is communicating with those who control the purse strings. If you know that you have an expense coming that won’t be completed in the current budget cycle, talk with your finance department, because they can ofter move money for you, or even find ways to pre-purchase parts of the project. This will help you avoid the “use it or lose it” feeling. While we don’t want to let money go, we also don’t need to spend “just because.” Also, communicate with your vendors to let them know the reality of your budget cycle. Just because they project might not be done until August doesn’t mean they can’t invoice for certain parts ahead of time, like the equipment, design, programming, and installation that’s been completed. Find ways to make project milestones fall within your fiscal calendar, not just your academic calendar.
Change the Cycle: Fiscal cycles are arbitrary. They exist, but they aren’t set in stone. In fact, it’s highly likely that your capital construction department doesn’t even follow an annual fiscal cycle. If you work on a project-based funding model, move the funds to accounts that aren’t impacted by annual reporting. This will allow you to earmark funds without fear of losing them or having them lumped into normal operating budgets. Once you pull a PO, have the funds moved to your accounting department to pay out over time. This will allow them to take the funds “off the books” but still allow you to pull from them as needed.
Utilize Recurring Revenue Models: Subscription services allow you to better plan expenditures as well as project your true annual needs. Rather than traditional CapEx funding models, OpEx expenditures can usually be paid for out of central purchasing as part of their normal operating costs. This allows you to present budgets with actual costs that are more aligned with true need. Likewise, as we as AV professionals move more to being under IT departments, we can align our purchasing model to compliment how IT already works. This makes it easier to understand what parts of our operations are services provided and which are hardware expenditures. Likewise, it becomes easier to change and upgrade services when they are tied to subscriptions rather than hardware boxes that have a shelf-life with fixed I/O.
These three simple steps are easy ways for us as tech managers to leverage the June-July budget cycle in order to be more effective. Communicate with the stakeholders, change the billing cycles to fit your need and accounting’s needs, and utilize predicable subscription models when possible.
About the Column
The higher ed AV vertical is over a five-billion-dollar sector of the commercial AV integrations industry. Add in the live events, and higher ed accounts for over ten-billion-dollars annually. That’s significant, and why tech managers in our vertical must treat our departments like big business. Every month, Joe Way, PhD, CTS, explores important aspects of business operations, sales, negotiation, finance, and strategy based on over 25 years’ experience in business development, founding and managing several multimillion-dollar companies in the entertainment industry.