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Financial Management For New Projects

Financial Management For New Projects

Run this process whenever you need to manage your finances for a new project
Financial Management For New Projects:
Create a project plan
Plan the budget and create an expense form
Document expenses
Confirm project is on budget
Approve or decline expenses
Schedule payment
Update financial expense form
Update project plan
Notify project sponsor of exception
Mark task as complete
Finalize and close budget
Relevant Checklists:


You’ve thought of a brand new project which will kick the backside of anything currently on the market; fantastic! Or, rather, it would be fantastic if not for the very real danger that your finances can very quickly dry up if careful management is not applied.

That’s why we here at Process Street have come up with this template on how to carry out financial management for new projects.

Never again be left in the mud whilst your golden idea crumbles around you from lack of funding. Be not afraid of reaching those dire make-or-break situations caused by untracked spending.

Let’s get down to business!

Financial Management For New Projects:

Create a project plan

Work with the project’s sponsor to create a project plan using the template below. Attach the plan and record the basic details of the project below using the form fields provided.

In order to become successful in creating and planning a project, one must take into consideration numerous ways to create one. We must focus on the main goals of doing this certain projects. Most of the time, these are SMART goals. Specific, Measurable, Attainable, Relevant and Time-bound.

Measure your progress to these goals using the sub-checklist below.

  • 1

  • 2

  • 3

    Achievable or attainable
  • 4

  • 5


Specific – All information regarding the elements of developing a project plan should be noted. It definitely answers questions: What, Who, Where and Why?


What is the project all about?

Who will participate in the development of the project?

Where will the project be done or be executed?

Why is the project necessary?

Measurable – presenting a project plan includes applicable and pertinent information like diagrams, tables and graphs that may identify the quantity, quality and cost of the project.

Achievable/Attainable – we should not be worrying if the project will flank after such time since at this early of creating a project plan can indicate whether this project is feasible or not.

Relevant – A Project plan should be aligned with the institution’s mission and vision or the department’s objectives. We may also have to consider some significant situation or if there is an urgent need for this.

Time-bound – Every second counts once a project has started. A project plan should at least ascertain target schedule until the project is done and in operations. Timeframes, checklists and calendars are essential in the completion of the project.

You can read this article for more information.

Plan the budget and create an expense form

Budget planning involves documenting planned financial project information expected to occur during the project. To properly develop a sound project budget, the project manager and sponsor should outline the known project activities that will need to occur and estimate their cost, keeping in mind time constraints and other dependencies that may impact the cost of the budget.

Create an initial Financial Expense Form and get it approved by the project sponsor. Use the form fields below to record the original and approved expense forms.

Budgeting is one of the essential things to consider before even starting on a project or a program. This will determine also the effectiveness of the specific actions made to consider the objectives and goals of the project.

Though this will not guarantee success all the time, it is one step towards avoiding failure.

There are different kinds of budgets: Operational budget, Cashflow budget and Capital Budget.

These budgets should be monitored for us to know is the company has a revenue for the year as to make necessary adjustments in the future, finding out if the sales or revenues outweighs the expenses and the possibility of the need for an additional investment for the company.

Note: One of the most important thing to do is to draft and create an Expense Form.

This expense form is being checked and supervised by an accountant or anyone from the accounting division. Specific details of the transactions, especially the date, amount dispensed, particulars and payee, should be filed in the expense form to trace all the cash that has been spent during operations which are vital in forming financial statements and reports.

Document expenses

After the Financial Expense form is approved and the project is underway, the project manager and/or administrator should begin to track all expenses on a regular, preferably weekly basis. 

During this process, the project manager must confirm that:

  • 1

    The tasks for which the expense occurred are valid (as per the Project Plan)
  • 2

    The expense was originally budgeted (as defined in the approved budget) 
  • 3

    Any unbudgeted expenditure is fair and reasonable before forwarding to the Project Sponsor for approval (if above a certain agreed upon limit)

 Keeping the accurate amount and details or particulars can quickly monitor the company’s financial standing and capability. Filing a correct and detailed expense report and transactions can help in making precise and proficient business decisions.

Record keeping for expenses incurred by the company should be accompanied by evidence like receipts, bills, service invoices, bank statements, check stubs and the like. It will not only guarantee the transparency of these expenses but also to help in the filing of income tax returns.

Examples of expenses:

  • Transportation expense 
  • Meal and Entertainment expense 
  • Representation expense
  • Prepaid expense 
  • Accrued expense
A simple way for any small business to record their monthly business expenses using an Excel Spreadsheet and see a breakdown of what they’re spending.

Confirm project is on budget

Next up, the project must be confirmed to be on budget. During this process, the project manager must confirm that:

  • 1

    The tasks for which the expense occurred are valid (as per the Project Plan)
  • 2

    The expense was originally budgeted (as defined in the approved budget) 
  • 3

    Any unbudgeted expenditure is fair and reasonable before forwarding to the Project Sponsor for approval (if above a certain agreed-upon limit)

Note: The Project Manager may have authority to approve only budgeted expenditures. 

Unbudgeted expenditures over a certain limit may require the approval of the Project Sponsor or Project Board.

During the creation of the project plan, one of the essential things to consider is how to manage the budget. The first thing to do is to determine the cost of the project like the manpower to be used, the resources or suppliers and other expenses in starting the project.

According to the Small Business Administration, your start-up budget will need to project out at least one year to help figure the financing you will need to cover until your business can be profitable. Work with the resources you have available to keep your personnel costs as low as possible. List the business tasks you will need done on a regular basis, and then determine which tasks you can do yourself. Then determine which tasks you can either do without for now, or have done by someone working part-time. Ask friends and family members if they would be willing to help out by working for you on a limited basis just until you get started.

Facilities Costs
You can keep your initial facilities costs low by starting your business out of your home. If you cannot start from your home, then look for facilities that will be as inexpensive as possible, but still safe and effective. Try to find facilities that offer office space, warehousing and manufacturing all in one location. Negotiate a deal with your landlord that will make your utilities costs part of your monthly lease payments.

Equipment costs can be kept low by leasing equipment rather than buying it, and by buying refurbished or used equipment rather than new. If you are handy, you might be able to find low-cost deals on equipment in need of repairs. Consider renting office furniture for your first year rather than buying.

Your product material costs are important to your bottom line, so find the best quality product materials at the best costs possible. If you can commit to large quantities over a long period of time, then you can sign bulk purchasing agreements that will save you money. Ask vendors about return policies for products you do not use or sell.

Some of the types of insurance you will want to look into are liability insurance, special vehicle insurance if you will be using vehicles for your company, health insurance for employees to help entice talent to come work for you, life insurance for you and your employees and any insurance that can be specific to your industry. According to Internet business resource IABusnet.org, you also can purchase financial loss insurance which will protect you against financial losses from a variety of reasons, including a downturn in the economy and a national chain business moving in to your area and causing you to lose revenue. You also will want to look into business interruption insurance. According to FindLaw.com, business interruption insurance will pay small business owners for lost revenue due to natural disasters or personal injury to the owner or other key personnel.

Once aforementioned are considered and still possible to work into the budget, the board of directors, investors or the entrepreneur can now put all the ideas in reality and start the project.

Approve or decline expenses

Based on the information from the previous steps, the project manager now needs to approve or decline any expenses. The dropdown form field below should then be filled out to record the action taken.

During the operations of the business, it is inevitable for the company to incur different expenses. Monitoring of the expenses monthly, quarterly or yearly is needed for the company to determine the cost of the certain area. Maintaining the highest accuracy of documenting the expenses can help identify the money spent and if it is well accounted for. For tax purposes, documents must be submitted yearly.

To identify if the expense filed is approved or not, the authorized person may ask for the supporting documents like credit card receipts, invoices, statements of accounts/billing, to check stubs or vouchers. Once these filed expenses are valid, the authorized person may approve the transaction. There could also be an instance that there are valid expenses with supporting documents presented but the expense reached the maximum limit or capacity and therefore, the authorized person may decline the filed expense.

Schedule payment

Following formal approval of the expense by the project manager, payment will be scheduled. It is typical to pay expenses in ‘batches’ to reduce the administrative workload in making expense payments and more effectively manage project cash-flow.

Record the date of the next patch payment, along with the amount being paid, using the form fields below.

Remember to also add the date to company’s calendar.

In business, there are needed raw materials or machines needed for the company to function well. It is important to deal and have a good relationship to suppliers or vendors. Establishing a good reputation in the market is also essential. Most of the time, payment is based on the set of rules and contracts between the supplier and the company.

Some terms to consider in payment schedules: the schedule or payment frequency can be daily, monthly, quarterly, semi-annually or annually; Payment date is the day when the payment was made; Maturity date – end date, date of the last payment; Date Rolling – is the rule used to adjust the payment date if the schedule of payment falls not on a Business day.

Update financial expense form

After the payment has been scheduled, the Financial Expense Form should be updated to ensure that an accurate record of the approval and payment is documented.

Although the form must be revised after the expense has been approved, it should also be updated throughout the process to ensure that the project manager always has current expense information at all phases of the project lifecycle.

After revising the Financial Expense Form, upload it using the form field below.

It is significant to review and update the financial expense form in order to determine where the revenue of the business or company increases. Updating financial expense forms is a way of checking and monitoring the expenditures of the company. In recording the expense, it does not necessarily mean that there is an actual payment but to record it at the time the company is legally liable for the payment.

One of the most common expenses we see on the financial reports is the Depreciation Expense, an expense that has a substantial impact on the income of the company. Depreciation expense is where the cost of a certain asset is divided equally among the periods in which the asset is expected to be used or functional.

Update project plan

On a regular basis (typically weekly) the project plan is updated, with the total expenditure recorded against each project task as listed within the Financial Expense Form. Once this has been done, record the most recent project plan using the form field below – see past the form field for more information on this step.

This enables the Project Manager or Administrator to:

  • Produce a view of the overall financial of the project to date
  • Identify any exceptions (e.g. instances where the actual expenditure exceeds the planned expenditure)
  • Note if the time frame of a task will be impacted while waiting for an expenditure approval or payment

After the implementation of the Project plan, it is necessary to update information on the development of the project. The most common questions to be answered when conducting a review for the update of the plan are mostly the following:

  • Was the plan effective and efficient?
  • Were the objectives, goals or targets met?
  • Are the managers, officers or investors satisfied with the result?

In order to check if the previous plan is effective, accurate data should be retrieved and further studied. Tables, graphs and illustrations should be presented to see up to which extent the company has met during the implementation of the project.

A certain percentage should show if the present approach is still applicable or needed for a revision to meet its 100% objective. Along with the revisions, changes in methods, sources or raw materials, sometimes even in management, are deemed necessary.

Notify project sponsor of exception

The project manager should identify any expenditure deviations to date. Based on the deviation from the plan, the Project Manager may: 

  • 1

    Change the individual / amount of resource allocated to a task
  • 2

    Allocate additional funds to complete a task
  • 3

    Request assistance from an external supplier to complete the task
  • 4

    Raise a project issue for action by the Project Board / Sponsor.

Sometimes, even as much as we made the project plan almost perfect or feasible, there will come a time when the expectations cannot be met. There were projected outcomes that were inevitable. Changes in timelines, priority and unforeseen events can cause significant variances.

It is appropriate to notify the project sponsor regarding these occurrences. Steps should also be taken for the modification of the project. To cite examples: the timetable can be adjusted to which the allotted time can be longer – just enough to meet the goal.

Along the way, there might be problems encountered on funding or unforeseen expenses, so the project sponsor could request for the increase in the budget. Outsiders or third parties could also be included in the execution of the project to assess and or improve the project so as to lessen the possibility of failure.

Mark task as complete

Once each task is completed, the respective task within the project plan is marked as 100% complete and no further expenditure may be allocated to the task for the duration of the project.

It is important to monitor the project as it progresses so as to make sure the project will be finished as scheduled. Reports are expected daily, weekly, monthly or even annually. 

Once the project has met the outcome, a group or team meeting is highly recommended to review if all the necessary objectives and goals were met.

The finance team or the accountants who are in charge of the budget would also make reports on how the goal was met using the project’s approved budget.

Progress reports, financial reports and the project closure or completion report must be submitted to the project manager/sponsor for future reference.

Finalize and close budget

After ensuring that all project expenses have been paid for and no other tasks/expenditures 
remain outstanding, the project manager or administrator should issue a final Financial Expense Form to the project sponsor for approval.

Once approved, this information should be included in the Project Closure Report for historical purposes. Record a copy of this closure report using the form field below.

Since budgeting is one of the most crucial and complex thing to consider in business. One has to ensure that all expenses of the company has been paid for. Complete financial reports and documents should be collated to account for all costs.

Guaranteeing that all project related contracts from third parties are also been finalized and closed, the project manager then makes a Final Completion report to be submitted to the Project Sponsor for review if all were done as agreed to avoid repercussions or failures. The records should also be kept safe as reference for future projects.


Relevant Checklists:

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