Why Automate Your Capital Expenditure Process?
By Mike Raia Posted October 16, 2017
As companies across several industries look to reduce and maximize capital spending, many are beginning to realize the waste and risk involved in their current methods for handling requests for capital expenses. Here are some of the drivers for CapEx automation.
Speed/Pace of Business/productivity
A traditional, manual approach to CapEx presents serious challenges. Especially in larger, more complex organizations, the CapEx process is a long, slow and inefficient process with multiple pain points and opportunities for lapses.
When a business is trying to get to market faster, stay ahead of the competition and provide shareholder value, an inefficient CapEx process can become a serious impediment.
When performing internal audits for CapEx projects (e.g. planning phase, tendering, execution, postmortem), accurate, complete information regarding the process is needed but is often lacking. Digging through emails, memos, and project notes to find information is not only inefficient, it also results in sketchy data.
Lack of Standards/Errors/Unclear policies
Any business that handles frequent planned or unplanned capital expenditures likely has some standards in place for what documentation, project data, justification and evaluation criteria, estimate calculations, etc. are necessary for approval. Documenting these standards and policies is a good first step but unless they are “baked in” to the process itself, they can be difficult to enforce and lead to errors, missing information, re-work and delays.
A manual, de-centralized method for approving capital expenses becomes exponentially difficult as office locations increase. The desire of finance executives to keep a handle on the expenses and collaborate across multiple offices has driven many to seek out centralized CapEx solutions. For companies operating globally, individual countries’ regulations also come in to play and there may be different levels of approval required for each asset as well as for each country.
Whether an organization is attempting to reduce costs or avoid costs in the first place, CapEx is often an area of interest. Process improvements and automation in CapEx are seen as predictable ways to see real and measurable cost reductions.