Choosing the right capital expenditure management software is a strategic decision.

With so many options to choose from, business leaders can get confused by the features and pricing models available, leading to a lack of understanding about how well a system meets their specific needs. It is essential to ask the right questions from the beginning to ensure that the software meets your requirements and delivers long-term value.

In this blog, we outline 14 questions you should discuss internally (and with potential vendors) before purchasing capital expenditure management software.

#1 What should the capital expenditure request form look like?

Modelling the form, which is the main interface through which many users will interact with the capital expenditure management system, around your existing paper or Excel-based form is always a good way to help familiarise users with the system alongside corporate branding.

Another question is whether you want to capture early wish list proposals as well as detailed business cases?

#2 What fields are mandatory, and which are optional?

There is no point forcing users to enter data that is not relevant to the request.

Conversely, you do not want initiators to submit high-value CapEx requests without crucial information that may inform an approval decision. The important fields will vary depending upon many factors, but only you can decide these rules.

#3 How often are exchange rates updated?

Initially, you may decide to import exchange rate data from a live web service, so you always have up-to-date rates.

However, if you worked out capital expenditure budgets at a certain exchange rate (e.g., the averages of the prior year), do you need your expenditures against those budgets to be at the same rates for the entire period?

#4 When are budgets used?

One organisation may decide that when you raise a CapEx request, it will be for a high-value purchase, and you will have already discussed and approved the premise.

In this scenario, most CapEx requests will likely be approved with the capital expenditure budget considered used as soon as the request is made. This will stop a business unit from going over budget.

However, another organisation may rely on speculative requests for early approval of lower-value items or new capital project ideas. Perhaps their approval lifecycle is much longer, with many in-flight requests at any given time, some of which will likely be rejected. This may lend itself to considering the budget used when the CapEx request is approved, not when it is raised.

These are two different methods of handling the CapEx budget with hybrid models in between.

In addition to budget tracking, another consideration is whether you need to record and track the actual cash flow. For many companies, this is an unnecessary overhead, but for the companies that need to closely manage cash flow for potentially significant expenditures, this can be crucially important.

#5 Does each approver require a hard-reject authority?

In simple workflows, each approver would approve or reject a request but what if you wanted to include functional or departmental users to provide recommendations rather than decisions?

Perhaps you need the input of IT, Marketing, Health & Safety, or another department to review and add their comments to a request to help inform later approvers but these users themselves do not have the authority to reject a request. Implementing ‘recommendation’ steps alongside approval steps might be the solution.

Another consideration is whether you can approve requests in parallel or sequentially.

#6 Do we require multi-lingual capital expenditure request forms?

Do you operate internationally? Do you have users around the globe speaking several different languages? If so, it might make sense to automatically display the capital expenditure request forms and user interfaces in the current user’s local language.

Conversely, if you are expecting global authorisation from head office, the fields on the request form, such as the description or justification, will need to auto-translate into the same language as head office.

#7 Do we need three quotes from different suppliers?

Or will three quotes be mandatory only if the requested amount is above a certain threshold? Can you override the rule? For example, if a product is available from one supplier or when the request is an emergency?

#8 Do we need an ROI spreadsheet?

Do approvers need to see an ROI spreadsheet (in an Excel template for consistency)?

If so, this may be required for profit-generating purchases only, so you might need rules around this.

#9 Can initiators only raise requests from their own business units?

Some companies manage a strict user/business unit membership relationship.

When a user initiates a request, the capital expenditure management system can automatically assign the request to the relevant business unit. This may seem more secure and it prevents requests from being raised from the wrong unit. However, it also adds an additional administrative burden and can preclude regional users from raising requests for multiple business units within their jurisdiction.

Normally, departmental heads or local financial controllers with the authority to raise CapEx requests can be trusted to select the correct business units. If an error is made, it would normally be rejected anyway.

#10 Can a capital expenditure request span more than one asset category, or should separate requests be raised for each?

Should a request be raised for individual items, requiring multiple requests for more complex purchases or projects? Or can a CapEx request cover multiple items, and therefore asset categories, per request?

If your CapEx project has a set budget and extends beyond the financial year, you will likely need to raise multiple requests against the same budget. In this scenario, it would be better to link capital expenditures to pre-defined projects in the system.

#11 How will the capital expenditure management software manage overspend?

The capital expenditure management system is likely to highlight if a CapEx request will exceed the agreed budget. But how will you configure the system to respond? Will you allow the request to be submitted? Perhaps you will escalate the approval based on delegated authority limits in your authorisation matrix? Or will you reject the request and not allow it to be submitted?

#12 Should we conduct a post-investment review?

Do you need to track post-CapEx spending and provide an analysis of the efficiency of CapEx spending?

Many CapEx workflow tools will manage the initial request for funds, but will they track ROI for specific CapEx projects and collate cashflow/actuals for post-project analysis and reporting?

#13 How will we manage related CapEx processes?

The capital expenditure process can sometimes begin by recording potential investment initiatives for consideration. This can capture the initial details about the project scope (e.g., resources required, benefit drivers) without the need to submit the detailed justifications and budgets required for a full capital request. The aim is to support a smooth transition from a potential project to a capital expenditure request if the initiative is selected.

The pre-approval of capital budgets is another early CapEx planning process involving multiple stakeholders. The budget is prepared annually, which incorporates all planned spending for the period. Budgets are proposed, amended, and formally approved, so automating this process with a workflow can add additional value to your organisation.

What about subsequent processes following the CapEx request approval, such as purchase order requisition and new supplier onboarding?

Whether you want to create these separate workflows and forms and link them to the original CapEx project is an additional factor to consider when evaluating capital expenditure management software.

In our opinion, the ability to consolidate related processes in a single project in eCapEx makes it easy to implement gradually, while all relevant parts are viewed together by users.

#14 Will the CapEx request cover other types of transactions?

When a fixed asset reaches the end of its useful life and cannot be repaired, it is likely to be sold or divested. Similarly, a capital asset may need to be transferred to another department.

Should the capital expenditure management software facilitate disposals, transfers, and other transactions to support the above scenarios?

#15 Do you need to integrate with other systems?

Do you need to integrate with third-party applications?

For example, many companies need to sync with on-premise Active Directory (AD) and cloud-based Microsoft Entra ID (formerly Azure Active Directory) to provide system access for employees.

Conclusion

This list is by no means exhaustive, but we hope it has provided an insight into the questions you should consider during the planning phase. There are no right or wrong answers here, and we would not tell you how your organisation should answer these questions.

What you need is a flexible platform that meets your needs and an experienced partner to support you during the planning process.

Are you looking to automate CapEx approval processes?

eCapEx helps capital-intensive industries such as hospitality and manufacturing manage the complete CapEx lifecycle – from planning and budgeting to approval, tracking and post-investment review.

You can schedule a demo or call 03300 100 000 to discuss your requirements.