Managing CapEx Requests in a Distributed Organization

By Mike Raia | Published September 9, 2021

As a business scales, managing Capital Expenditure Requests scales with it, especially when people and offices are scattered around the world.

Getting approval for capital expenditure (CapEx) requests in a small company is pretty straightforward. You put together your request, walk over to the President or owner of the company and ask if you can spend the money.

In a mid-sized company, things get a little more complex. There may be a few different people you have to talk to or email to get approval before submitting your request. You'll probably have to forward an Excel or Word form internally and then over to Finance with all the necessary approval emails. It's inefficient, but you accept it as the way things are done, and besides, you need that capital expense approved!

CapEx in the Enterprise

However, once you start talking about an enterprise-sized company, manual request processes like the ones above can bring a department to its knees. The time lost waiting for responses alone can cost thousands and thousands of dollars when critical equipment or land purchases sit on a dozen different backburners while approvers across several layers of management juggle multiple priorities. Meanwhile, getting visibility into the request's status may take several emails and phone calls every few days.

Add in the fact that a large percentage of the workforce may now be remote, and the time for manual CapEx/AFE approval processes has officially ended.

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The Impact of Growth and Expansion

I recently talked to a VP at one of our manufacturing customers whose organization has multiplied over the last four years to become a global enterprise with offices throughout North America and Europe. He's responsible for all equipment capital expenditure requests and said he remembered when the company started; people would complete paper forms and hand them to him for approval. As the company grew, the process stayed the same. However, he was only in the home office about a week out of the month. That meant CapEx requests would be sitting on his chair for weeks sometimes. "Imagine their frustration!" he told me. "After several calls and emails, they might scan the paper form and send me a PDF. I'd print it, sign it and send it back with the approval once I got to a scanner or fax machine. Inconvenient for everyone."

Many companies still cling to these kinds of out-of-date practices. Manual processes for handling approvals are cumbersome and slow operationally, but it's perhaps even more challenging from an audit perspective. When my conversation with our customer turned to his organization's Auditing Team, he had to laugh. "Finance would come to me, wanting to see the actual document for the CapEx request, which was likely sitting in a file cabinet at one of seven different plant locations worldwide. It was time to start the phone call and email parade again."

The Solution: Workflow Automation

The growth of organizations in size and geography is often the impetus for seeking a workflow management solution to handle CapEx requests, OpEx requests, and other finance-related processes. Workflow management is tailor-made for these kinds of processes. Multiple approvers, tiered approval flow, low-friction approval methods (like simply clicking on a link in an email to approve a request), detailed audit trails, etc. They also provide requestors with a clear line of sight into where the approval is in the process, reducing the number of check-ins and stress.

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accounting   budget   capex   capital expenditures   finance   Workflow  

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Mike Raia

Marketing the world's best workflow automation software and drinking way too much coffee.