Capital expenditure planning can be an important part of an organization’s budgeting process. The need to effectively plan capital purchases and depreciation can be critical with maintaining accurate budgeting and forecasting throughout the fiscal year. Despite the importance of maintaining effective capital expenditure plans, many firms may find the process tedious or cumbersome. This can be largely due to data inaccuracies caused by a lack of consideration to capital purchases and their related expenses, lengthy approval processes, as well as a lack of formalized CAPEX planning processes used by various departments within a single organization. However, as the need for a more accurate road map of an organization rises, the importance of CAPEX planning processes becomes more of a pressing issue for managers and finance teams.
Including CAPEX as an integrated part of a Corporate Performance Management (CPM) solution can be beneficial to a firm’s overall success in budgeting and forecasting. A CPM solution can provide templates that allow department or project managers to enter capital purchases based on their specific needs and automate the calculation of depreciation/amortization for review by approvers and finance teams. A well-implemented CAPEX planning process can provide the following benefits to end-users, reviewers, and approvers:
- Entering capital purchases by location, department, business unit, etc.
- Creating and tying capital expenditures to projects with a start and end date
- Prioritizing and setting approval statuses for capital expenditures
- Defining approval chains from end-users to final approvers
- Depreciation/amortization calculations based on legal, industry, and firm standards
- Reporting of capital assets and expenses by purchase or summarized by priority, approval status, project, location, department, business unit, etc.
- Mapping capital purchases to asset and depreciation/amortization accounts in the general ledger for visibility in financial reports
- Maintaining security for end-user access and approval processes
Integrating a CAPEX module in your CPM solution can become an important aspect of a budgeting and planning cycle. It provides a workspace for future expenditures where finance and management teams can collaborate, view and ensure the financial and operational integrity of capital budgets and forecasts. While offering the ability to standardize processes throughout an organization, it can also provide security to limit end-user and approver access as required. With a well-designed CAPEX module, budgets and forecasts are able to display a more accurate representation of a firm’s financial future.
How can Delbridge help?
Delbridge Solutions understands the significance of CAPEX planning in any organization. With a team of expert consultants, we can help you review your current CAPEX planning process and implement a solution which can improve the way you budget and forecast capital expenditures. We have a proven track record of providing CAPEX solutions using products from our partners which include IBM (Clarity and TM1), Prophix, and Tagetik. The Delbridge team can assist with improving capital expense planning, thus providing clients with a more accurate budgeting and forecasting solution. Please contact us if you have any questions or if you would like to see a demo of our solutions!