What the year-end rush looks like on campus
A year-end spending rush (often called use it or lose it spending) is a concentration of purchases in the last weeks of a fiscal year, made mainly to consume a budget that would otherwise lapse.
The pattern is well documented in the public sector. A study of US federal procurement found that spending in the last week of the fiscal year was 4.9 times the rest-of-year weekly average, and that year-end IT projects were more likely to receive low quality scores.[1] Universities are not federal agencies, but many run on a similar model: an annual allocation per department, a fiscal year that often closes on June 30, and a rule that unspent operating funds return to the center.
Picture a history department with $40,000 left in its operating budget in May. The chair worries that an underspend will shrink next year's allocation. So the department orders new laptops for adjuncts, a classroom display, a stack of furniture and a prepaid software license, all in three weeks. Procurement receives dozens of rush requests like this across campus, several from suppliers never used before, while AP is trying to accrue and close.
CFO / Vice President for Finance
Sees a spike in the final month that distorts the year's results and makes next year's budget harder to set.
"Was that a real need, or just a budget that had to go somewhere?"Budget Director
Cannot tell committed funds from true savings until it is too late for departments to plan sensibly.
"They spent it because they couldn't see it until May."Director of Procurement
Buyers get flooded with rush requests, so bids get skipped, new suppliers get rushed through and contract prices get missed.
"Everything is urgent in June. Nothing was urgent in February."Department Chair or Business Manager
Fears that an underspend will be read as a smaller need and cut from next year's allocation.
"If we don't spend it, we lose it next year too."Is a year-end rush distorting your spend?
Tick every statement that is true today. Three or more means the problem is likely costing you real money.
Six root causes behind year-end spending spikes
Tightening the cutoff date alone moves the rush a week earlier. These are the reasons the spike happens in the first place.
Unspent funds return to the center
When operating budgets lapse at year-end with no carryforward, spending is the only way a department can keep value from its allocation. The rule itself creates the rush.
Next year's budget is based on this year's spend
If allocations roll forward from actual spend, an underspend looks like proof of lower need. Chairs protect their base by spending it.
Budget holders cannot see remaining funds in real time
Monthly ledger reports lag by weeks and ignore open POs. Departments discover in May how much is left, too late to plan purchases across the year.
Committed spend is invisible
Approved requests and open purchase orders are not netted against budgets, so departments both overspend and underspend by accident, then correct at the last minute.
Procurement capacity is flat but demand is not
The same small team handles a normal month and a month with several times the volume. Controls that work in October break in June.
No review of year-end purchases after close
Once the year closes, nobody looks at what was bought in the last month, whether it arrived or whether it was used. Without that feedback the same pattern repeats.
What the year-end rush costs an institution
Research on public budgets shows that year-end spikes are large and that rushed purchases tend to be worse value. The same mechanics apply to university departments working under annual allocations.
The direct cost is money spent on items that were bought to use a budget, not to meet a need: equipment that sits in boxes, licenses nobody activates, furniture that duplicates what a department already has. The indirect costs are larger: skipped bids and off-contract prices, suppliers onboarded without proper documentation, AP overtime and estimated accruals at close, and a budget base that is inflated every year because it was built on spent money rather than planned money.
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The expert playbook: six practices that flatten the year-end spike
These practices work with any finance system. Budget policy comes first, because no tool fixes an incentive to spend. Visibility and sourcing then make the new policy workable.
"In procurement transformation work, the year-end spike always told me more about the budget rules than about the buyers. Departments are acting rationally. If the institution takes back what they save, they will spend it. Change the rule, show people their real remaining budget in February, and the June rush shrinks on its own."Md. Kafil, Co-founder and CEO, Zapro. Former senior product specialist on SAP Ariba Network and procurement transformation manager at KPMG.
Change the carryforward or reinvestment rule
Stop basing next year's allocation on this year's spend
Show committed and remaining budget in real time
Publish year-end cutoffs in the spring and enforce them
Pre-source the categories that always spike
Review year-end purchases after close
"At Voonik I saw hundreds of suppliers frozen over one missing document. Year-end is when that risk peaks: new suppliers set up in a hurry, certificates never collected, invoices landing on AP during close. Tools are built for the buyer, but the cost of rushing a supplier through lands on the buyer anyway, usually months later."Daniel Sagayaraj, Co-founder and CTO, Zapro. Previously built and ran supplier onboarding and payments for a 15,000-supplier marketplace at Voonik.
How Zapro spreads spend across the year
Zapro ties every request to its budget line at the moment it is raised, so departments see what is committed and what is left, and finance sees the year-end spike building weeks before the cutoff.
| Root cause | Zapro capability | What changes |
|---|---|---|
| Remaining funds invisible to budget holders | Spend Analytics with budget tracking | Budget holders and finance see committed and remaining spend by department and category, all year. |
| Committed spend not netted against budgets | Procurement: automated purchase requests and approval workflows | Every request carries its budget line, and approvals follow rules by amount, fund and date. |
| Rushed orders miss contracts | Strategic Sourcing events and supplier selection | Sourcing events for the categories that spike run early, so rushed orders still land at agreed prices. |
| New suppliers rushed through at year-end | Vendor Management onboarding templates and compliance monitoring | New suppliers complete the same checklist in June as in October, with documents stored on one profile. |
| AP flooded during close | AP Automation with invoice capture and matching | Invoices are captured and matched to POs and receipts automatically, so AP handles exceptions, not volume. |
Zapro keeps legal entities, accounts and vendor data aligned with your ERP or accounting system through two-way sync, so budget views match the general ledger. See Zapro integrations.
A 30, 60, 90 day plan
Days 1 to 30: Measure the spike
- Pull two years of spend by month and department
- Size the final-month spike by category
- List suppliers first used in the last month
- Draft a carryforward option for leadership
Days 31 to 60: Change the signals
- Give budget holders live committed and remaining views
- Publish year-end cutoff dates by purchase type
- Launch sourcing for the top spike categories
- Agree a late-request approver in finance
Days 61 to 90: Lock it in
- Pilot the carryforward rule in two colleges
- Send monthly pacing reports to deans
- Require full onboarding for all new suppliers
- Schedule the post-close year-end review
KPIs to track progress
| KPI | How to calculate | Review |
|---|---|---|
| Final-month spend share | Spend in the last month of the fiscal year divided by total annual discretionary spend | Annually, by department |
| Budget pacing | Committed plus spent funds divided by budget, compared with the share of the year elapsed | Monthly |
| Late requests | Requests submitted after the published cutoff dates | Weekly from April |
| Contract coverage at year-end | Final-month spend placed with contracted suppliers divided by final-month spend | Annually |
| Rushed supplier setups | New suppliers created in the last month with incomplete documentation | Annually |
| Unused year-end purchases | Value of final-month purchases not received or not in use after 90 days | Each fall |
Go deeper with our guide to procurement KPIs.
What a Zapro customer saw after moving this work into one workflow
"Zapro's strategic sourcing tools have allowed us to negotiate superior contracts and realize significant cost savings."Frank Esmeijer, Vice President Development, Bob W
Why Zapro for this challenge
The year-end rush is a budget signal problem that shows up as a procurement problem. Zapro gives every department a live view of what it has committed and what is left, and keeps rushed purchases on contract and properly controlled when the spike comes.
Budget visibility at the point of request
Requests carry their budget line, so committed funds are counted the day a request is raised, not when the invoice posts.
Sourcing and purchasing in one place
Sourcing events, contracts and purchase requests connect, so the supplier chosen in the fall is the one used in June.
Controls that hold under volume
Z1 reads requests, matches invoices and flags risk, so a surge in June requests does not mean skipped checks.
Every budget holder included
All plans include unlimited users, so every chair and business manager can see their own numbers.
When Zapro may not be the right fit
- Your institution already allows full carryforward and your final-month spend looks like any other month. The problem may not be worth a new tool.
- You need a full budgeting and planning system for position control and multi-year forecasts. Zapro tracks spend against budgets and works alongside planning tools.
- Most of your year-end spend is capital projects managed through a separate facilities process. Zapro covers operating purchases, suppliers and AP.
Frequently asked questions
What is use it or lose it spending at universities?
It is the habit of spending remaining budget before fiscal year-end because unspent funds will be returned to the central budget or used to justify a smaller allocation next year. It shows up as a spike in purchase requests in the final weeks of the fiscal year.
Is year-end spending always wasteful?
No. Some purchases are planned for year-end on purpose, and some needs are real. The concern is spending driven mainly by the deadline, which research on public budgets links to lower quality outcomes. The goal is to separate planned purchases from purchases made only to use the money.
Does allowing budget carryforward fix the problem?
It helps most. Research on federal budgets found that an agency allowed to roll funds over did not show the same year-end spike. Institutions often limit carryforward to a share of the balance or to a restricted project fund, so central finance keeps some flexibility.
How early should year-end purchasing cutoffs be announced?
Most institutions publish them in the spring, with different dates for purchases that need bids, standard purchase orders and catalog orders. The earlier and clearer the dates, the more requests spread into April and May instead of June.
Can we reduce the rush without new software?
Yes, the policy changes matter most: a carryforward rule, allocations not tied to last year's spend and published cutoffs. Software helps when budget holders cannot see committed funds in real time or procurement cannot keep controls in place at peak volume. Zapro adds live budget views, sourcing and matching on top of your ERP.
About the experts behind this page
Sources
- Harvard Kennedy School, Liebman and Mahoney, Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement, 2013
- National Taxpayers Union Foundation, Use It or Lose It Spending Analysis, 2019
Editorial note: this page is published by Zapro, which sells procurement software. Best practices are written to work with any tool, and figures are cited to their original publishers. Last reviewed 29 September 2026; next review due March 2027. See how the Procurement Challenges Directory is researched and reviewed.