Does Your CapEx Workflow Need an Update?

Capital expenditures (CapEx) are expenditures on things like machinery, equipment, furniture, IT infrastructure or property that make your business operational and profitable. Expenses qualify as CapEx when their usefulness extends over a period of years. 

CNC bore machine.

A strong, consistent CapEx process ensures resources are used wisely to
help your business increase profits.

A company’s CapEx approval process is important, because major expenditures need to be discussed and approved. But when the CapEx process is manual and paper-based, it is slow, clunky, and prone to errors and mounting frustration. An automated CapEx workflow is necessary for most businesses.

A Typical CapEx Process

Each organization has its own process, but typically someone makes a CapEx request, which must then be approved by several stakeholders. Those stakeholders may be department heads, people in the finance department, or various vice presidents or other leaders. Once the CapEx request has been approved, a purchase order is initiated. The CapEx workflow is completed once the order has been fulfilled and what has been purchased is logged as an asset. 

Keeping Everyone Informed

Multiple people are interested in the progress of a CapEx workflow, especially the person who initiated it. With manual CapEx workflows, it’s hard to keep people informed of the status of the process. That’s another reason why automated workflows make so much sense. With role-based access to workflow status, anyone involved in the process can log in and see the status. Which approval authorities have granted approval? Which have requested more information? With automated workflows all this can be done without endless rounds of phone tag or schlepping from place to place asking around.

Make a Practice Workflow and Test It Thoroughly Before Deploying

Creating an automated CapEx workflow isn’t difficult if you have the right workflow software. Some workflow software includes templates for CapEx that can be modified. Going from a manual to an automated workflow for CapEx doesn’t have to be difficult. Perhaps the most important thing to do is to create a workflow and test it out thoroughly. 

Two happy people using laptops.

Testing workflows thoroughly ensure they perform as expected when you deploy them for use.

Learn what happens when someone enters invalid information or attempts to skip a step by trying it out. Make sure the workflow records who uses the workflow at which steps and when. This makes the workflow auditable, so if there is ever a question about what was done and by whom, it’s easy to find out the answer. Only after the CapEx workflow has been thoroughly tested should it be deployed for use.

Update Your CapEx Workflow Periodically

Just as all business processes evolve, so do CapEx workflows. Suppose the existing workflow requires approval by department heads, but then two departments merge. You would need to modify your CapEx workflow to accommodate this. Over time, the dollar amount that qualifies a purchase as a CapEx purchase may change, and your workflow should reflect this too. Once you have a solid workflow (whether for CapEx or anything else), it’s smart to review it annually to determine if changes should be made to make it more efficient or to accommodate changes to the company.

Automated workflows for capital expenditures make sense for many reasons. They’re faster, more accurate, keep better records, and are easier to audit. Your choice of workflow software makes a difference too. 

PerfectForms is workflow software that allows you to drag and drop workflow elements into place, with no programming required. PerfectForms comes with a CapEx template that you can modify to suit your needs, or you can create one from scratch. We encourage you to watch the PerfectForms demo video and see for yourself how the right workflow software raises efficiency and productivity while reducing costs and errors.