An appropriation request is a formal application made to a decision-making body to allocate funds. These requests specify the intended use of the funds and the necessary amount to ensure the project’s success. The capital request process plays a vital role in securing the required funds for growth or innovation in the business world.
What Is the Capital Request Process?
Securing funds is closely tied to overall money management. Consequently, managers need to establish and follow a process to ensure each proposal meets specific criteria. Determine what those criteria are ahead of time and then follow these steps.
1. Project Proposal
Begin with the development of a detailed but concise proposal. This document should outline the need for funding and how managers will use that funding to create value for the business. Once the proposal is complete, managers submit it for review and approval.
2. Capital Appropriation Request Form
If approved, the next step is to fill out a capital appropriation request form. This form should include all pertinent details about the project, including its purpose, expected costs, and potential benefits.
3. Submission for Final Approval
Once completed, managers submit this form to the decision-making body for final review and approval. Sometimes, the decision makers might call on the project manager to provide more information or make a more detailed presentation.
4. Allocation
If approved, the governing body allocates funds and the project can proceed. However, if investors deny the request, the business will either need to appeal or explore other funding options.
What Happens After the Funding of a Capital Appropriation Request?
After receiving funding, the project manager will need to track and report on the project’s progress. Performance tracking is essential for three reasons:
- It allows the decision-making body to see how well the investment performs.
- It ensures that the project stays on track and does not exceed its budget.
- Tracking progress makes it easier to determine whether or when withdrawal becomes necessary.
Why Is the Capital Acquisition Request Process Important?
The capital appropriation request process provides two main benefits. First, it ensures that businesses have the necessary funds to grow and innovate. Second, it helps to ensure that project managers responsibly use these funds.
By developing a detailed proposal and submitting it for approval, businesses can avoid confusion or misunderstanding about the project’s purpose or costs. It also compels business managers to focus on the objective value and feasibility of projects when determining what to pursue.
What Are Some Common Reasons for the Denial of a Capital Acquisition Request?
Sadly, not all project proposals gain positive responses. These are some of the most common reasons governing bodies choose not to fund a project:
- The governing body believes the project is not in the business’s best interests.
- The expected costs of the project outweigh the potential benefits.
- The project does not fit with the overall strategy of the company.
- There is not enough information about the project to make a decision.
More often than not, when investors deny requests, they provide reasons for doing so. Business managers can review these reasons to determine whether to appeal and how to do so.
How Can Account Receivables Automation Help With Funding Approvals?
Investors look at more than just the business proposal when determining whether to allocate funds. Cash flow and other key performance metrics also play a role. Automating the AR process boosts cash flow and reassures investors that funds allocated will be used for the intended purpose, instead of accounting for working capital deficits.