Why Capital Expenditures Need More Attention

Forward-thinking companies have to prepare for transition of technology. With intense competition, and pressure on margins, companies have to put effort into optimizing their capital expenditure processes in order to survive in the future.

Capital expenditures play the role of the largest and riskiest accounts in financial statement. This is why an understanding of the motivation for capital investment decisions is so critical, and has shown to significantly affect the value of a company.

Savvy business owners have recognized that capital expansion is a natural course of action to take, especially when business is good with the possibilities of doing even better. Investing in the expansion of asset acquisition or in some cases, the upgrading of existing assets such as buildings, equipment or other physical properties goes hand-in-hand with increase in operational scope. And, with that, the need for automation becomes crucial.

Today, businesses cannot afford to let everyday operations just spiral out of control. Does this mean you jump into the automation pool right away? Not quite. You have to pay attention to the key signals in your operations that suggest that you are ready for automation. These signals can be as small as a missed email to as huge as a missed business opportunity. A fully audit of your systems will prepare you to decide if your company is ready for automating capital expenditure processes.

Let’s examine four indicators that suggest your CapEx processes might need more attention.

Sub-standard reporting and dashboarding

If key metrics and indicators of the success of your operations are stored in every desk in your office, you never really get a real-time picture of your progress. This is one of the first red flags that tell you, you need to evolve your reporting from multi-desk to single-mind.

With visual reports and dashboards, you gain a complete picture that becomes easily sharable throughout your organization. Furthermore, reports are custom developed as per requirements.

Losses in efficiency

The three scariest letters for any company’s finance department are NRE – Non-Recurring Expenses. With de-centralized data processing and inefficient and slow-moving business processes, companies find themselves dealing with a lot of NREs. Another huge red flag.

Without a plan to manage unexpected expenditures, in the long run, you are likely to leave money on the table. With automation of key CapEx processes, you can control, manage, and predict expenditures based on historic performance and increase the amount of business each dollar brings to you: AKA efficiency.

Consistent missed opportunities

Some expenses can be made later, but often you reach a point where a time-sensitive request hits someone’s desk and gets stuck in a bottleneck. If this keeps happening regularly in your company, you exponentially increase the risk of losing potential business opportunities.

Maybe you had to buy the piece of property before close of business today, or had to approve a new piece of machinery for your business before the price went up again. Automation inherently avoids these delays from happening.

Either by delegating your authority to a proxy or managing approvals remotely, position the right tools in the hands of the right people at the right time.

Losing a competitive advantage

In competitive industries, when you are faced with ever-challenging margins, you need to look for opportunities to gain an advantage over your competitors. This means constantly being on the lookout for the best deals, either with products or suppliers for your business. With an inefficient CapEx process, you lose that ability when you place the weight of the success of your company in the hands of Bottleneck Bob.

To stay competitive, you should stay lean, and to stay lean, you need to get rid of everything that slows you down in a way that it also speeds you up. When your CapEx process is well-managed, you are able to plan for future investments ahead of time and secure an advantage over competitors to stay ahead of the curve.

Automating CapEx

You need to eliminate error-prone spreadsheets and email processes. With this need comes a solution: automated workflows that produce accurate approval requests. This is a big step towards better time and resource management, accuracy and overall workflow efficiency.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s