Businesses rush to spend funds as budget year ends - East Valley Tribune: Business

Businesses rush to spend funds as budget year ends

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Posted: Thursday, December 23, 2010 2:45 pm

The wild-eyed parents circling the mall parking lots today aren't the only shoppers facing a fast-approaching deadline.

Office managers across the country have seven business days to get the invoices in before annual budgets kick over to a new year. At many major firms, the "use it or lose it" budget model prevails, and any cash left over goes the way of wasted vacation days.

The cycle has even caught on as a marketing theme for manufacturers trying to score some last-minute clients before the Times Square ball drops and product prices go up.

Budgets everywhere come with a deadline: They can be found at many government agencies, where workers rush to file contracts before the fiscal year ends, or on university campuses, with students stocking up on Gatorade and other nonperishables so they don't waste dining points.

In the office, sometimes the shopping sprees aren't as much fun as a trip to Best Buy. Paper clips, anyone?

Office supply stores see a reliable boost in business-to-business sales in the last month of every fiscal quarter, said Perry James, president of office supplies research at the NPD Group in Port Washington, N.Y.

The quarter that ended in September saw monthly office supply sales nationwide jump nearly 20 percent to $393.9 million. Complete figures for this month obviously haven't come in yet, but James expects another surge as both quarterly and annual budgets close Dec. 31.

Researchers at the NPD Group analyze weekly reports on retail and business-to-business office supply transactions made nationwide.

In some ways, a year-end spree is recession-proof. Throughout 2009, year-over-year comparisons to 2008 were down for every month -- until the budget deadline started to loom.

"The month of December 2009 was the only month that sales grew over the previous year," he said.

The "use it or lose it" budget model is typically found only at larger corporations, said Denis Meinert, a Pittsburgh executive who works as a chief financial officer for hire. He's a CFO at three smaller-sized tech firms, which "spend their money more carefully" because they have to, he said.

"Some of the companies I've worked for, they'll have some left over in their marketing budget," he said. "And they just push it into next year and spend it as you go."

Naturally, some firms wouldn't mind taking some of that marketing money off your hands. Across the country, firms that specialize in company swag like promotional mousepads and pens have started year-end pushes to score unused budget funds.

The proposals can get creative.

Why not use that leftover cash to translate your brochures into another language? Or pick up some extra calculators or maybe a promotional ice scraper?

Promotional product sales can go sky high at the end of year because budgets need to be spent, and some product costs inevitably rise on Jan. 1, said Sharon Klein, president and owner of Choice Marketing Group Inc. in Boynton Beach, Fla.

She expects a price increase for flash drive memory as the computer-file carriers become smaller and more popular, and she encourages clients to get T-shirt orders in now.

"Cotton's gone up," she said, which will start to affect clothing prices.

For those with money burning a hole in their suit pockets, business consultants suggest keeping it simple.

More elaborate expenses like travel costs still aren't as justifiable in an economy reeling from major turmoil on Wall Street, said Jan Ferri-Reed, president of KeyGroup, a consulting firm in Upper St. Clair, Pa. "We have seen investments in programs and things whereby they can prove a return on investment."

Toner cartridges, anyone?

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