Session C
Presenting a financial
case
‘Hey pal. Gi' me a fiver for a cab!’
‘Excuse me, I'm really sorry to trouble you. I wouldn't if I didn't have to. Oh, I hate doing this. You must think I'm really awful. You see I had my money stolen. I had it when I left home this morning. I remember because I counted it when I was coming to work this morning on the bus …’
‘Could I please borrow £2.50 to get the bus home tonight? I've lost my money and haven't a penny left. I will pay you back tomorrow morning.’
There are many different ways to ask for money. Which one of the above do you prefer? I hope you will agree that the best approach is the straightforward one, which provides you with a good reason for the request, does not waste your time and states how and when you will get your money back.
In the first two sessions you developed your ability to evaluate projects and decide between options. If you wish to see your projects implemented, you need to obtain agreement from management to go ahead and therefore, to give your projects the best chance to be selected, you must be able to present a case well.
When you are presenting a financial case for a project to go ahead, remember this. Be clear, precise and give appropriate factual details for:
the money needed;
why it is needed;
how it will benefit the organization;
how the investment is to be repaid.
Your organization may want a slightly different approach from other organizations but the general principles are common and we will look at these in this session.
Your organization may have its own forms on which requests for finance must be made. Or an unofficial set pattern may have been arrived at by people following a given pattern some time ago.
Activity 27
Think about expensive purchases you have made personally or have been involved in making for your organization. Suggest the various key points you have needed to consider and that you would expect to see included in the documents of request for finance.
Your suggestions are likely to have included:
the amount needed;
what it is needed for and why it is needed now;
the way the investment will benefit the organization;
the way the investment is to be financed;
the payback or return on investment.
Detailed calculations, cost-benefit justifications and further explanations typically complete the documentation. It is important to know who is going to receive the report or request. You may know them or of them. How will they react if a request for finance conforms or does not conform to this presentation? Your understanding of this will help you judge how you should complete your financial cases to ensure you are successful in your requests wherever possible.
There is usually quite a lot involved in putting together a financial case and it takes time. Because of this a useful preliminary start is to discuss your ideas with your manager before putting together a formal case. This will identify any problems early and your manager may be able to provide useful suggestions, such as the right time to present the case to senior management. Once you have the preliminary agreement from your manager, you are less likely to encounter objections later, although, of course, if your analysis of the appraisal identifies that the project will not be viable, your manager is unlikely to encourage it being taken further.
So, the stages of getting a project up and running are:
Considerable information is needed at different stages. The following diagram looks at the stages you will follow in selecting information for the right project.
Information gathering is very important early on. It is an important stage in the process and is less expensive than implementing the project itself. Perhaps the most difficult part of the process is identifying appropriate projects, although the need for some change will always eventually occur.
Activity 28
Hall and Deacon Ltd is a firm of printers which has run a successful local business for some years producing letterheads and other business stationery.
In recent years business has dropped off and several potential customers have commented that the company's charges are high and designs are not as flexible as those available from competitors who use electronic and disk-to-print equipment.
The company has not made changes in its existing equipment because:
it paid back its cost ten years ago and the business makes a return on investment of 25 per cent each year;
new equipment on the market continually needs updating and always seems to be going out of date, so there seems little point in changing until it is essential.
If you worked for this organization would you consider presenting a case for change and, if so, what information would you need?
It is likely to be difficult to get any financial case agreed in the light of the overall view taken by the organization. But that does not mean you should not try. Any manager has a responsibility to make suggestions to improve organizational effectiveness.
Although waiting until change is essential may have financial merits, the company will have no experience of new technology and may find it difficult to go straight into using sophisticated equipment.
Information you would need includes:
details of optional projects, their capital and ongoing revenue costs and full details of possible additional work which might be gained by the company;
details of expected future changes so that the life of new equipment can be judged.
The business is unlikely to accept anything which would yield a return on investment of less than 25 per cent.
Has this led you to think about any potential changes in your organization?
This Activity may provide the basis of appropriate evidence for your S/NVQ portfolio. If you are intending to take this course of action, it might be better to write your answers on separate sheets of paper.
Identify a situation at work where you feel change is appropriate. Investigate possible ways in which changes could be made and perform payback and return on investment techniques and cost-benefit analysis on possible projects.
Decide whether change really is appropriate and which project you prefer.
Make notes of your findings.
If you are compiling an S/NVQ portfolio you may be able to develop your notes into a full report about change to provide to management. You may be able to use your report and feedback on it as the basis of possible acceptable evidence.
Once you have details and have made your decisions you then need to present your case.
Once you have drawn up the case your organization will require it to be presented in the right way.
Activity 30
Examine any instructions about presenting financial cases in organizational manuals and discuss procedures with managers. Make notes about what you learn and draw up a report format indicating the typical headings you would be expected to include to meet the needs of your organization.
Every organization is different and the more you know about how to approach senior managers with requests, the easier you will make your own life and the more effective you will be for your organization as a whole.
1 List the eight key stages in getting a project up and running.
2 Complete the following:
It is important to gather full information to ensure that an appropriate __________ is selected to overcome a problem. Choices are narrowed by performing __________ analysis and __________ analysis.
3 Complete the following:
Using the appropriate forms of submission is more likely to mean that your request for finance will be __________. Familiarity helps senior __________ to examine the __________ effectively.
4 Select the appropriate response from the following choices:
When presenting a case for finance, which of the following need to be included?
A How much money is needed.
B How successful the organization has been in the past.
C How comprehensive the selection of projects has been.
D How the project benefits the organization.
Tick one of the following options.
| A and B |  |
| B and C | |
| C and D | |
| A and D | |
Answers to these questions can be found on pages 85–86.
When presenting a case for finance, important details are:
the amount needed;
why it is needed;
how it will benefit the organization;
how the investment is to be repaid.
A financial case needs to be:
clearly presented;
easy to understand;
in a form which makes the most effective use of everyone's time.
Gathering information is an important stage in putting together a financial case. Comprehensive information means that more aspects of a project can be considered and there is less chance of money being spent unwisely.