Preparing subsidiary funding requests for a group decision

Commitments already made

A subsidiary may have paid a deposit or signed a preliminary agreement before its expansion proposal reaches the group board. Show those commitments separately from the amount requested now and spending that remains optional. The board needs to know which choices are still open.

Record what was authorized, by whom and under which delegation. Include cancellation terms and contractual milestones, with specialist advice where required. An unrecoverable payment does not by itself justify the remaining investment.

When the cash is needed

Two proposals with similar total funding requirements can place different demands on the group. One may need an early supplier payment; another may draw funding only after an operating milestone. Set out the expected cash movements by a common period and reconcile them with the proposed delivery sequence.

Show maintenance needed for current operations separately from expansion and discretionary spending. Maintenance still needs evidence: what work is required, when and what happens if it is deferred.

Include costs outside the project budget. Shared technology, finance support or a management appointment may be funded by another entity. Name the budget that pays for them and confirm the capacity is available. An affordable project can still depend on unfunded work elsewhere.

Use consistent treatment of working capital and recurring operating expense. If a forecast assumes that customers pay before suppliers, show the commercial basis for that timing. Finance can then distinguish the operating funding requirement from the accounting presentation of the investment.

Conditions for the next stage

A group may be able to authorize preparation while leaving a larger commitment dependent on further evidence. Define the work permitted at the first stage and the limit of that authority. Identify the evidence required before another payment, contract or operating commitment becomes permissible.

A condition should answer a spending question: has a service agreement been signed, a capacity test completed or a contract term reviewed? Name the person supplying the evidence and the authority deciding whether it is sufficient. A progress update is not that approval.

Staging also has a cost. Suppliers may price a smaller commitment differently, or a delayed decision may affect availability. Explain these consequences alongside the funding preserved. The board needs to see whether the proposed stages can be separated in practice and what obligations remain if the next stage is declined.

Requests that depend on each other

Several subsidiaries may rely on the same internal team, distribution agreement or source of finance. Add a group-level schedule showing when those shared demands coincide. Test whether approval of one request changes the cost, timing or feasibility of another.

The subsidiary’s manager remains responsible for its demand forecast and delivery requirements. Group finance makes the calculations comparable. Different growth rates may be commercially justified; retain the reasons beside the common funding schedule.

After approval

The decision should identify the authorized amount, its purpose, relevant conditions and the person accountable for delivery. Subsequent requests explain changes against that approval, including the effect on total commitments and other subsidiaries.

Keep unresolved conditions visible until the designated authority accepts the evidence or changes the condition. If the original proposal is replaced, show what happens to contracts, deposits and shared resources already committed.