Recently, I found a $50 note in my wallet. I don’t usually carry cash - like many people, I tap my phone for most purchases. So it’s always a pleasant surprise to find.

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And even though the money is mine, I still find it hard to not treat it a little bit differently. It feels more like a “gain” rather than misplaced money that should go where all my money seems to go to – paying the bills!

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<Queue unnecessary purchase here!>

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At this time of the Financial Year, I’ve observed similar instincts emerge across the corporate world when it comes to unspent monies in the programme budget. The interpretation is that this remaining budget is a financial windfall that corporate managers should spend immediately, and potentially rashly.

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There is a whole Nobel Prize worth of research into behavioural economics to explain this human response.

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When you are in the fortunate position of hitting your project milestones AND having unspent budget at the end of the year, rather than treating it as a windfall, I have often taken the following steps to set the team up for success for the next Financial Year:

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1. Advance spending – many work programmes are multiple year initiatives. Therefore, where you can and it makes sense to do so, consider pre-paying and locking-in the necessary resources, assets, or licences that the programme will require for the following year.

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2. Revisit your project scopes – having been focused and disciplined on what was in and out of your project’s scope at the start of the year, this is an opportunity to go back and review work items that may have been deprioritised or pushed out of scope as “nice to haves”. Alternatively, new requirements may have been identified as the project has been rolled out and this is an opportunity to consider adding these to the delivery schedule.

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3. Invest in innovation – with most business’s focused on delivering improved growth or productivity, these funds could be spent on delivering an MVP or quick win to support nascent initiatives or trial a new approach to an existing problem.

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4. Support BAU – given how lean many business’s are running their BAU teams, remaining budget could be allocated to give additional support to existing operations or to review and propose upgrades to current processes.

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5. Give it back! – a potentially controversial end to this list and one that many avoid, however, the CFO and shareholders may thank you! Pooling unspent budget at the end of the year, either to be used by the other business units or to record on the P&L as profit.

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Of course, when assessing these steps, you should always ensure that any spending is within procurement guidelines, compliant with your company’s policies, and transparently communicated and documented.

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And remember that the project team also definitely deserves a nice lunch!  😉

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Mavin Advisory Group is a specialist investment and wealth management consulting firm that provides tailored solutions to meet the unique needs of its clients. Founded by industry experts with a deep understanding of the evolving financial landscape, Mavin delivers compelling insights and innovative solutions to help clients achieve their strategic goals.

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