Capital expenditures are monies used to purchase long-term assets that will provide at least one year’s benefit to the business. Examples of CapEx include purchasing equipment, furniture, and property; acquiring patents and technology; and making improvements to current facilities. CapEx are made using either cash or credit. They are listed as company assets and their value is depreciated over time for tax purposes. High dollar amounts are usually associated with capital expenditures, and most companies have strict guidelines in place to oversee these purchases.
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.
Capital Expenditure Procedure
Every company has an individual CapEx procedure to follow. However, most include common steps:
Let’s map the flowchart for the mentioned groups:
An employee identifies an out-of-the-ordinary need that requires funds.
A solution is found.
A report is made that details the amount of the requested expenditure, the projected return on investment and the justification for the purchase.
Department heads, financial staff and senior management assess the CapEx request and determine if the company will approve the expenditure.
Key personnel reject the proposal or sign the approval and the purchase is initiated.
Although this can be accomplished manually, time and money are saved by automating the process using appropriate, secure software.
Manual processing has many disadvantages:
Human error can cause delays. The more people who handle a request, the more opportunities there are for errors to occur.
Your company has procedures and guidelines for CapEx, but they are hard to enforce without one person overseeing the entire process.
Each human error made can cause missed deadlines, misinformation and more time spent on dealing with these issues.
Think of Fluix as the “employee” overlooking your CapEx procedures. The automated workflow features keep track of everything involved in the process and continue to move it along seamlessly.
Check how to build your process in Fluix
Capital Expenditure Process Flow
The Fluix software platform allows for the CapEx process to be automated. Using the Fluix workflow builder, each step of your company’s CapEx procedures is entered into a flow chart. A benefit of using Fluix rather than manually following your company’s capital expenditure procedures is that anyone with access can view the real-time status of the request.
Because Fluix process automation includes the ability to securely digitize documents, share those documents and obtain e-signatures, your streamlined, automated process will take a capital expenditure request through each required step much faster than conventional methods.
Your company can set rules for what information must be included in an initial CapEx request. In addition, if the parameters of each step aren’t met, the Fluix system requires compliance before it will pass the request to the next stop.
A CapEx process flow shows all the steps between the initial request and final approval or rejection. This includes all the people in your organization who need to process the request in some way. For instance, expenditures over a certain dollar amount probably require approval from a high-ranking financial officer.
You’ll also be able to see the next steps and possible outcomes. This is especially handy when the person who made the request is working in the field, because it takes less time to log in to Fluix and look at the progress than it would to call or email others for that information.
After the process is complete, Fluix retains a record of each step. That record is useful for seeing if your process works well or if it has room for improvement. In addition, people who make requests in the future can study previous CapEx records to see how your company handles these expenditures. For instance, if a particular request had to be sent back to a department for more information before it could progress in the system, future individuals can provide that information initially. This prevents delays.
Let Fluix Automate Your Capital Expenditure Processes
Time is money. For businesses who want to save time and increase efficiency, using Fluix can accomplish both of those goals. The Fluix platform doesn’t require any coding skills; it is easy to use and shows its worth immediately. Automating your workflows reduces the risk of delays caused by human error. Fluix is a software solution that you can easily implement to improve the security, efficiency and collaboration in your business’s structure.
The Fluix company is so sure you’ll be pleased with its usefulness that we offer a 14-day free trial. After that, you can choose between three levels of service, starting at only $20 monthly per user. We offer outstanding customer support during the free trial and beyond. For more information, contact Fluix via live chat or set up an account so you can get started on your free trial today
Ready, Set, And Build Your Perfect CapEx Approval Workflow