Rangers are yet to announce a full-time successor to Pedro Caixinha, after the Portuguese manager was sacked last month following a disappointing 1-1 draw against Kilmarnock.
Aberdeen manager Derek McInnes remains the favourite to take over the Scottish giants, but plenty of names are also in the frame including interim manager Graeme Murty who has two wins from two in the meantime.
Smith, who also used to be director of football at Ibrox for a short spell during the 2011-12 season, claimed that managers interested in the job will be worried about the size of the budget given ahead of the January transfer window.
"I don’t believe an interview will be required if they have identified who they want", Smith said. “However, that person will want to know the budget at their disposal.
“They will want funds to help take the club forward. That will worry some candidates. There are out-of-work managers who would take the job, regardless of the financial position.
“Those in a job, looking to protect their reputation, will look very closely at the budget.”
It remains to be seen if a new manager will be in place ahead of Saturday's Scottish Premiership encounter against Hamilton at Ibrox, which will be Murty's third game in charge of his second spell if the Gers do not find another candidate before then.
Three points and maintaining Murty's 100 per cent record could see Rangers go second, if Hibernian drop points against St. Johnstone and Aberdeen lose to Motherwell.