So you are looking ambitiously towards the future and are committed to ensuring that your business will one day grow and expand. In that case, you’re going to have to commit to managing the process of capital expenditure (CapEx) in a better way.
You’ve found yourself reading this article and have done your due diligence in learning more about CapEx management. You have also stumbled upon discussions that speak to the benefits of CapEx but are still not committed to making the adoption of CapEx management happen.
Not a worry. Let’s help alleviate any further reservations you may have about CapEx and give you a broad brushstroke glimpse into why it is a must-have for your finance department if you want to streamline your investment activities and replace old, manual, repetitive tasks with automated workflows.
When you upgrade to an automated CapEx approval process, managing all the activities that go into capital investment is instantly streamlined. A CapEx software solution answers questions like, “Who is a part of the approval process? And, how many people does it take to contribute and commit to the allocation of money?”
Whether it is for expansion or maintenance, CapEx management software facilitates the allocation of capital investment and the ease of use of an automated solution to aid in conjunction within the entire organization. Automation eliminates error-prone spreadsheets for tracking the approval process while enabling you to create a workflow for bigger ambitions.
Integration with other systems
If you are concerned about how CapEx will work with your existing ERP system, don’t be. A CapEx management solution seamlessly integrates with most ERP systems, making it possible to integrate ERP with CapEx software. Once this is done, anyone can have access to what stage an investment portfolio is in, and anyone can improve the process of approvals.
Less spending
CapEx gets your spending under control because it allows for the taking of action on unauthorized spending. Stakeholders can be tasked with finding where to control spending by keeping a 360-degree view of all investment portfolios.
The automation of CapEx processes helps businesses never leave money on the table because there are no holes and delays in the approval process. Coupled with accurate forecasting, CapEx software offers users the ability to centralize workflows, thereby making sure that the right people make approvals.
Budgeting
Capex helps you budget and track spending, which is a critical step to profitability because CapEx represents a substantial cash investment; it is used to show return on investment (ROI) during specific periods. For example, suppose you have a separate budget for operational expenses. In that case, you can easily calculate tax issues and deduct them from current tax years to make it easier to spread across a course of years of depreciation.
Along with the management of expenses come challenges. Because CapEx deals with large cash output, if you mismanage your expenses, it could spell disaster. Here are some things you can be faced with if this happens and you don’t have the right systems in place:
Inaccurate budgeting
The measurement and estimation of costs for CapEx could be complex. If you don’t consider all factors, your projects can go over budget.
Unpredictability
After making large investments, outcomes aren’t predictable all the time. Things don’t always go as planned, and risks aren’t always eliminated.
Failure to plan for the long-term
When CapEx covers long-term projects (which are often found to be industrial), the long time period could lead to discount rate estimation that might cause complications to arise.
Policy enforcement
Undoubtedly, you have policies in place that govern CapEx. But, you may be struggling with their enforcement, especially if you’re still using spreadsheets.
The beauty of a CapEx management system is that these challenges can be, indeed, eliminated. A CapEx software platform takes all these stepping stones into account and ensures a seamless process to managing your capital expenditures.
With CapEx software, you will be able to work within the framework of accurate budgets. All the workflows and activities will be predictable. You will be better able to plan for the long-term, and all policies will be enforced by default.
Analyst Bottom-Line
You need to say farewell to your CapEx software reservations. Save yourself and your company time and work with data that can be used to plan your capital expenses accurately, on time, and on budget.
CapEx software effectively eliminates all of your current processes that you manage manually. When you implement CapEx’s automation, it provides insight into the adjustments to depreciation rates, expansion, and maintenance to impact your business’s bottom line.
Capital expenses are a critical part of any organization; they must be accurately tracked and monitored. With ease-of-use, accountability, integration with your current systems, faster approval times, post-review, and budgeting, it is possible for you to make the right decisions and achieve the profitability you seek with your investment portfolios.
