richard-adams
Richard Adams
23 February 2021
12-benefits-of-capex-automation

12 benefits of CapEx automation

Discover how CapEx automation replaces manual, error-prone CapEx approval processes with standardised workflows, faster approvals, complete governance, and greater visibility of CapEx spend.

Capital appropriation requests (CAR) represent some of the most important decisions taken by a company, often involving substantial outlays, detailed business cases, and lengthy approval cycles with multiple stakeholders.

Tracking users’ spending limits, the required approvals, and the status of requests can be very complicated, especially if the requests are on paper and your staff are geographically dispersed. Financial professionals have resorted to ad-hoc methods, including the use of spreadsheets, to keep track of the approval process and CapEx spending.

The result is an elongated, error-prone, and disconnected process with documents created in Word and Excel sitting in different repositories across multiple brands, business units, and countries with little centralised visibility.

Automating your CapEx approval workflow solves these challenges and offers significant benefits over a manual process. In this blog, we reveal 12 benefits of automating your CapEx approval process with CapEx approval software.

CapEx automation will eliminate paper

CapEx management systems reduce the amount of paperwork circulating in an organisation and cut approval cycles.

Within a point-and-click form designer, you can build standardised capital expenditure request (CER) templates to capture relevant information.

Also known as a request for approval (RFA) or authorisation for expenditure (AFE), the forms include configurable tabs outlining current position, request description, justification, supplier quotes, costs, cashflow, and audit history.

At the same time, you can only submit accurate information for approval thanks to integrated sanity checks.

Standardise your CapEx approval workflow

Another benefit of CapEx automation is the ability to automate the routing of completed CapEx requisition forms through bespoke authorisation paths based on asset category, business unit, budgets, and authorisation limits.

This is essential and often a legal requirement for publicly traded companies as it ensures they meet audibility and compliance requirements and is good practice for companies of any size.

Send automated eMail alerts

One of the main challenges associated with a paper-driven approach is the process bottlenecks due to a capital expenditure approval form sitting in an approver’s inbox or being assigned to someone out of the office.

Your chosen CapEx management solution will send automated notifications based on role, due dates, delegations, and more.

Observe governance procedures and protocols

Even with a manual process, many organisations have a formal capital expenditure policy to ensure cash is spent efficiently and effectively. This means the approval will be made following pre-agreed limits of authority based on hierarchy/job role. Functional or asset category rules, such as seeking approval from the IT Director for all computer-related expenditure, may also exist. Unfortunately, a manual paper-driven process means that the policy is open to misuse.

Paper requests can often reach the approver missing crucial information, documentation, or signatures. Inevitably, this results in delays as the approver returns the request to the originator for clarification or rejects it altogether. In the worst case, time pressures may lead to the procedure being skipped or ill-informed decisions being made.

CapEx management solutions enforce your internal governance procedures, ensuring that CapEx spend can only happen once the necessary approvals have been given.

Other rules such as approval limit setting, escalation procedures, and total spend authorisations can be easily configured.

Provide greater visibility to management

Once a paper CapEx request form has been completed, the originator, and management alike, have little (or no) visibility over the approval process. This problem is a key challenge for organisations with a large geographical footprint and it can lead to wasting time chasing updates.

CapEx automation allows initiators, approvers, and managers to monitor progress in real-time, discover bottlenecks, and intervening, if needed, to keep things running smoothly. For example, once an initiator raises a CapEx request, they have complete visibility over where it is, who is it with, and how long has it been with them. The initiator can, if necessary, nudge the right person because they know who has it.

At the same time, a common challenge with the paper-based approach is the time-consuming process of building reports for executives or compliance audits. This involves employees spending hours reformatting updates received from around the business and data is soon out of date as it is based on a point in time, not real-time.

With CapEx approval software, you can quickly download standardised dashboard reports in any format that offer a real-time snapshot of your business. Some of the most common reports include:

  • Total number of CapEx submissions approved by business unit/country
  • Total number of CapEx requests outstanding by business unit/country
  • Average number of approval days per CapEx by business unit/country
  • Exception alerts if a deviation exists between actuals in the CapEx management solution and actuals in your financial software

Ultimately, the management dashboards increase visibility from the top down for financial transparency, and from the bottom up for better user confidence.

capex-automation-enforces-regulatory-compliance

Archive requests for regulatory compliance

With the implementation of CapEx approval software, approved CapEx requisitions are automatically archived allowing you to quickly review information about any activity, past or present, including time-stamped approval decisions, documents, and comments.

In the event of an audit, this archive is essential, but it can also provide statistical data to analyse spend or workflow metrics over many years. Automated retention policies can be applied to purge-down old data to a pre-defined schedule.

Cost savings from centralised visibility and improved control

Significant cost savings will be realised by implementing a CapEx approval software through:

  • Tighter spend control
  • Harmonisation of processes and capital spending across departments and geographies
  • Eradication of procurement overlap
  • Improved utilisation of existing equipment/capital
  • Leveraging bulk-buying power
  • Forecasted cashflow allows for savings through better capital management.

Supports document management and file sharing

One of the challenges of a manual, paper-based process is that supporting paperwork and documents may get lost during the approval cycle.

The document management capabilities inherent inside eCapEx provides control, security, and management of your digital data. All data is typically stored centrally, which provides easier administration, higher security, distributed/remote database support, and a standard backup mechanism.

Collaborative document authoring/mark-up

Another challenge associated with paper is version control with key stakeholders often reviewing documents that have been superseded.

Similarly, clarifications sought during the approval cycle may not be appended to a paper form. For example, an individual might ask a question over the phone or eMail, but the answer might not be stored with the CapEx request form, and somebody else might ask the same question at a different approval level.

A good CapEx management solution will allow you to save a record of any questions and answers with the request. When a senior executive further up the chain authorises the request, they can see all the questions that have been asked, and the answers to those questions.

The collaborative document authoring feature in eCapEx enables the user to author, edit, amend, add comments, and annotate the following document types:

  • DOC/DOCX
  • XLS/XLSX
  • PPT/PPTX
  • TXT/CSV
  • PDF
capex-automation-enables-remote-working

Work from anywhere

In a post-COVID world, cloud-based CapEx approval software facilitates remote working as they are accessed from any location using any modern browser, operating system, tablet, or mobile device with all major platforms (including Chrome OS, iOS, and Android) supported.

Also, cloud-based deployments offer reduced initial expenditure and predictable ongoing costs whilst removing demand upon your already stretched IT department, making the path to entry easier and cheaper.

Complete CapEx project management

The best CapEx approval software goes beyond simple capital expenditure approval with the ability to track post CapEx spend and provide analysis on the efficiency of CapEx spent.

Take, for example, the renovation of a hotel. Many CapEx tools will manage the initial request for funds, but the best CapEx management software will allow the cashflow and actuals to be gathered for post-project analysis and reporting.

As eCapEx is built upon a flexible and powerful eForms and workflow platform called Process Director, additional processes can be incorporated. For example, the case management component could provide a shared context for the entire renovation; organising work (e.g., actions, decisions), and collating information (e.g., data, documents, messages) in configurable case folders to support the successful completion of the project.

No more delayed spending

Continual investment in a business is essential to maintain market share and involves acquiring new assets or upgrading existing ones to remain competitive.

A paper capital expenditure approval process can delay spending as people are ‘put off’ by the long manual process and question whether the spending is necessary. The impact on the business is spending does not happen quickly enough which may harm profitability.

With CapEx automation, the process is quick and simple with employees more inclined to initiate requests, giving you the edge over your competition.

If you would like to learn more about CapEx approval software, please call us on +44 (0)3300 100 000. Alternatively, you can request an eCapEx demo by completing the form below.

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Are you looking to automate your CapEx approval process?

Are you a CapEx Buyer, Management Accountant, or Category Manager considering CapEx approval software?

eCapEx is the No.1 CapEx approval workflow software for finance teams. Fill in the form below and we will contact you to discuss your requirements.






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