Are you following the money?
October 25, 2019
Key considerations when automating your CapEx process
Managing capital expenditure processes manually is time-consuming. When it comes to the complexity of the processes you rely on for your approvals along with the need for smarter analytics, the challenge becomes even greater. You want to focus on managing old and new business, but not at the expense of efficiency and productivity.
A study by Gartner Executive Programs reveals that business process automation explicitly meets the return-to-growth objectives of top companies worldwide. Top performers have realized that in order to improve the performance of their CapEx management process, they have to employ the kind of tactics that integrate with their activities regardless of how complex they can be.
Let’s look at five key features you should be considering when automating your CapEx management process.
User-Friendly
Your success with CapEx management
depends on how quickly and efficiently you can integrate it into your business. Hiring programmers or in house development costs time and money, so you need a plug & play solution that requires little coding. A robust platform has the ability to manage not only routine tasks such as approvals by email, but also non-routine expenditure approvals such as legal settlements and write-offs, no matter how complex the approval process.
Traceability
Manual approval chains can lead to Requests for Expenditures (RFE) getting stuck and cause an otherwise avoidable loss of business. It should be easy to see in a single view exactly where the necessary forms are in the approval process, and what decisions were made at each level of approval. Having a full audit trail of all comments and decisions gives you visibility on which approvals were granted and when. When delegating authority, we want to be able to properly route and notify approvers of changes more effectively and more efficiently.
Mobility and Mobile Support
In a rising mobile workforce, consistent reachability is crucial to your company’s productivity. The American Community Survey found that 20-25% of employees already work from home or telecommute, with near 50% of the workforce being pro-mobility. Having mobile apps on all devices means you’re no longer tied to a stationary device to manage time-sensitive approvals. Being able to reach approvers in the right time will help make the right expenditure decisions. This means no more missed deadlines or unavailable approvers. Having mobile apps can add another valuable tool to your CapEx management toolkit.
Easy Reporting
Measuring your CapEx
metrics allows you to manage them even better. You should be able to use visual graphs and trends to compare expected versus actual spends. Being able to analyze spends by category adds depth when you review your expenditures. It should be easy to link up your existing financial ERP systems to improve multiyear forecasting and budgeting.
Access and Storage Security
Data stored in centralized locations makes the secure storage of requests and budgets the highest priority of any automated CapEx management platform. With global and mobile accessibility, a platform that limits approval types to certain roles will ensure that only the right people are able to make approvals. You must ensure that the platform you choose takes security and access control seriously.
While the change to automated processes can seem scary, evaluating your CapEx management platform with these big-picture criteria can make your decision easier. Are you losing money due to holes and delays in your current approval process? Is your process not allowing you to study and forecast its health? CapEx Management Automation
might help you get there.
CapEx underspending may indicate stalled execution. See how improving visibility and workflow timing helps protect ROI across the capital lifecycle.
Introduction: Capital expenditures ( CapEx ) are critical investments that can significantly impact a company's long-term growth and success. To effectively manage these investments, Key Performance Indicators (KPIs) play a crucial role. Understanding the dos and don'ts of CapEx KPIs is essential for making informed decisions and optimizing the return on investment. The Dos: Alignment with Business Objectives: Do: Ensure that CapEx KPIs are closely aligned with the overall strategic goals and objectives of the organization. This alignment ensures that capital investments contribute directly to the company's growth and profitability. Clear Definition and Measurement: Do: Clearly define and measure KPIs related to capital expenditures. Ambiguity in measurement can lead to misinterpretation of results and hinder the effectiveness of decision-making processes. Return on Investment (ROI) Analysis: Do: Implement KPIs that assess the ROI of capital investments . This includes metrics such as net present value (NPV), internal rate of return (IRR), and payback period, providing insights into the profitability and financial viability of projects. Risk Assessment: Do: Include KPIs that evaluate the risks associated with capital projects. Assessing factors such as market conditions, regulatory changes, and project execution risks helps in identifying potential challenges and mitigating them proactively. Benchmarking: Do: Benchmark CapEx KPIs against industry standards and competitors. Comparative analysis provides valuable insights into the company's performance relative to others in the market, facilitating continuous improvement and innovation. The Don'ts: Isolation from Operational Metrics: Don't: Isolate CapEx KPIs from other operational metrics. A holistic approach that integrates financial, operational, and strategic KPIs provides a comprehensive view of the impact of capital expenditures on the entire organization. Ignoring Post-Implementation Analysis: Don't: Neglect post-implementation analysis. KPIs should not stop at the project completion; rather, they should continue to assess the actual performance against the projected outcomes, enabling continuous learning and improvement. Overlooking Flexibility: Don't: Implement rigid KPIs that cannot adapt to changing business environments. The economic landscape, market conditions, and technology evolve, and CapEx KPIs should be flexible enough to accommodate these changes. Neglecting Stakeholder Communication: Don't: Fail to communicate CapEx KPIs and their implications to key stakeholders. Transparent and open communication fosters trust and ensures that decision-makers are well-informed, reducing the likelihood of misunderstandings or resistance. Relying Solely on Financial Metrics: Don't: Rely solely on financial metrics. While financial indicators are crucial, incorporating non-financial KPIs related to sustainability, environmental impact, and social responsibility provides a more holistic evaluation of a project's success. Conclusion: Effectively managing CapEx KPIs requires a strategic and balanced approach that aligns with the organization's objectives. By implementing the dos and avoiding the don'ts outlined above, companies can enhance their decision-making processes, optimize their capital investments, and pave the way for sustainable growth and success.
Business Case for Purchasing CapEx360 Software
Using SAP HANA S/4 and CapEx360
Can you capitalize our CapEx software?
Smart investment and effective management of capital are both critical components of sustaining success for capital-intensive companies. Companies that measure the value of their CapEx projects are implementing the kind of best practices that ensure they retrieve optimal ROI from their investments. Making every investment count can only happen when the CapEx process is optimized, and this involves focusing attention and resources on stakeholders who are involved in the review and approval process at all stages of decision-making.
https://www.caprivisolutions.com/2019/12/13/capex-software-for-business-growth/
There are ultimately two reasons why a company spends money on capital expenditures. The first is to pull it back into the business, the second - to maintain it. If you’ve determined that you need to make a CapEx investment, you need to decide how to pay for it: is it better to use cash or debt?
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