Budget

On Cycle Budget Approval

The Mattermost Finance Team prepares and reviews budgets by department annually. This process commences on January 1st with final approval made by the Board of Directors (BOD) during the first scheduled BOD meeting of the new fiscal year, usually taking place in the first quarter.

Due to sensitivity of budgets, only MLT has visibility into their budgets for the departments they oversee. If you are uncertain if your vendor spending is approved in the budget, you can either reach out to your MLT member or Finance at [e-mail].

Spend that is already approved should follow the Procurement Process by submitting a purchase order in Accrualify.

Off Cycle Budget Approval

Spending that is in addition to what was approved by the Board of Directors for the fiscal year is considered off cycle and would need to be reviewed separately. Below are the steps to follow to request additional spend.

Step 1: Functional Approval

Different levels of functional approval are required depending on the amount of spend requested. The thresholds defined in the Authorization Matrix indicates which team member(s) is required to approve. Spend approval should be looked at holistically and not by the vendor.

For example, SOC-2 compliance initiative requires a compliance software for 40,000 USD; an annual audit for 20,000 USD; and a consulting assessment framework for 50,000 USD. Individually, each is below the CEO functional approval threshold of 100,000 USD but in aggregate, is not. If you encounter a similar scenario, the appropriate functional approval would be the CEO.

Requesting Functional Approval

It's best practice that you and your manager are aligned on any off cycle spend before seeking functional approval to avoid decking. When requesting functional approval, an email request should be sent to the approver that is most aligned with your department, and [e-mail] should be CC’d with the following details at minimum included in the email. Depending on the request, it may be appropriate to expand and provide additional context like an ISP or Google doc to make your case.

Subject: The subject of the email should include the purpose, department making the request, and total requested spend amount. Example: Off Cycle Spend Request_Security_50,000_USD.

Body of Email:

• Name of the vendor(s)/supplier(s)

• Purpose of the request

• Rationale - Questions you should be able to answer succinctly include:

  • Why is this spend needed?

  • Does this replace an existing service or software?

  • What does spend accomplish that current spend does not?

  • How does this align with your V2MOM and company wide objectives?

• Amount requesting - The request should be for annual spend and not fiscal year spend as we will, at minimum, have a three-year running forecast

• Type of program spend - Software, contractor, agency, consulting, etc.

• Period of expected spend - One time or ongoing, and for how long?

If the functional approver agrees with the need and spend, they should Reply All in the email indicating they have reviewed and are aligned with the budget needs.

Step 2: Financial Approval

Financial approval is the next step once all the functional approvals have signed off. The Finance Team assesses the requested spend against company objectives and financial targets. The following items listed below are several areas of review that are consider during the financial approval process:

• Program spend creep

• Cash burn impact

• Business metrics (e.g. Magic number, CAC, LTV, net loss, fully burdened costs, etc.)

• Use case: Does it require cross-functional support and use or is the spend specific to a subgroup of staff members and/or department

Financial decisions may take up to 48 hours once the functional approval has been obtained. Missing information as part of the functional approval step may delay a decision or deny approval.

Approved Spend

Finance approvals will follow the Authorization Matrix. Each Finance approver will Reply All to the email with the word approved. Once all finance approvals are obtained, your off cycle financial request is successfully completed.

At that time, follow the Procurement Process to submit a purchase order request form along with your off cycle spend request documentation.

Denied Spend

By seeking either functional or financial approval, spend does not automatically mean your request will be approved. Rather, this process is to create a repeatable and concise format to quickly and effectively make decisive budget decisions on the needs and impacts of the business.

In some instances, the Finance Team may require further details before making a decision. In that case, the Finance Team will Reply All via the email thread. Due to many external and complex factors, the Finance Team may not be able to approve your spend request at said time. Any denied decision will include an explanation.