Capital Expenditure Approval
Most companies require multiple authorizations to approve capital expenditures, at least those over a certain dollar amount. This system helps to prevent fraud and unnecessary purchases. When a CapEx request is initiated, it usually goes through many departments on its way to the CFO. Once the CFO receives it, it is reviewed in detail to determine:
- Will the CapEx be profitable over time?
- How will the expenditure increase efficiency or revenue?
- Are there other, less expensive options that would provide the same benefits?
- Does the operating budget have room to accommodate the request?
- Is this the right time to make a purchase?
When a decision is made, the request is either denied or passed along to the procurement department.