FEATURE CAPITAL EXPENDITURE IN THE SPOTLIGHT
Access Maintain Consultant Max Carruthers explores everything you need to know about CapEx – from learning what they are to why they are so important for your business development and how capital management software can help you.
As your business grows so do your investments and expenses. Capital expenses otherwise known as CapEx refer to the large-scale capital investments and projects that likely take up a sizable amount of your business’s annual budget.
CapEx management is a notoriously challenging area of business management – with such large amounts of money being accounted for and the longevity of the investment, CapEx management involves a lot of planning, tracking and budgeting with input from an array of business stakeholders.
For that reason, managing CapEx projects efficiently and close management of budget and schedule are key to executing successful investments for business growth.
What are CapEx projects? Capital expenditures, also known as CapEx refers to the fixed, non-consumable assets of a business, such as property and buildings, business equipment, machinery and vehicles and other fixed expenses that typically serve the business for longer than one accounting period.
CapEx projects might include the acquisition, maintenance or upgrade of those fixed assets and the processes involved in that acquisition, such as initial proposal, approval and assessing the up-front costs against the benefits to the business over time, the time it will take to gain a return on the initial investment and how long the asset will serve the company.
Many CapEx projects run over budget and behind schedule which can prove costly to businesses and incur a longer time until you can make a return on investment, so many businesses highlight CapEx project planning as an important factor when it comes to operational software to support business processes.
CapEx vs. OpEx So, what makes an expense a CapEx (capital expenditure) rather than an OpEx (operational expenditure). CapEx typically refers to the large business assets that serve the business over more than one year and often add value to the company’s portfolio – such as buildings, land or equipment. On the other hand, OpEx refers to the day-to- day operating expenses incurred by a business – such as utilities, salaries or rent.
In most cases, it is clear which category a business expense falls into, but sometimes non-tangible expenses such as software or patents may be better considered a CapEx depending on the lifespan and value to the company and the amount of budget it might incur. In these cases, it is often best to consult a tax specialist to confirm what is best.
46 | TOMORROW’S FM
General repairs and maintenance of existing fixed assets (unless the improvements will increase the useful life of the asset)
Why CapEx is important Your CapEx investments can usually significantly impact your company’s long-term success – the investments you make to grow your business now may improve efficiency and productivity in time, but the bottom line is profitability – realised by either an increase in sales or a decrease in operating costs.
But your CapEx planning and projects can also affect you in the short term as well. These projects often involve multiple people and pass through several layers of proposal, planning and review which all take huge amounts of time – another cost to your business. Similarly, a project that runs over schedule can delay your business from benefitting from the investment or projects that run over budget can throw all your budgets out. Efficiency is key when it comes to CapEx planning – which is where technology can help.
What is capital planning software? CapEx project management is a weighty task for any business whether it’s their first or hundredth project and capital planning software, sometimes known as capital programme management software (CPMS) is the technology that creates a more efficient workflow to progress projects, often providing a shared workspace where all the parties involved can review the project at different stages.
Capital planning software can help businesses gain greater visibility over the impact of CapEx projects on their investments so they have full visibility over process, budget and schedule and can see how the project is progressing over time and the eventual ROI of the project.
Access Maintain offers a project module that enables business operators to manage their CapEx projects and budgets from discovery to completion across multiple sites. For each project, you can review and monitor the KPIs for contractors, quotes, POs and invoices along with a full financial summary of what has been raised, approved and paid with an overview dashboard providing a snapshot view at all stages of the project helping you digitise and automate the processes in your CapEx projects.
Benefits of using cloud-based project
management software for CapEx There’s a whole host of benefits to unlock when you digitise your business’s CapEx project management to help you execute your projects more efficiently. Such as:
twitter.com/TomorrowsFM
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66
