Capital Expenditure Requests
At Flowingly, we work with every kind of process and organization. Capital expenditure requests are universally one of the most critical of all processes. Organizations must be able to consistently and responsibly manage the approval of large and enduring financial decisions.
Depending on organizational specifics, there are many variations in capital expenditure approval processes. It is essential it remains easy to understand. The Capital Expenditure request process is too important to allow ambiguity or overcomplexity to sneak in.
1. Project Details
The first step in any Capital Expenditure request process is to gather the information that will help to determine the costs and relative benefits of the expense. The ‘Request Details’ step of the Capital Expenditure request gives the Initiator the opportunity to provide risks, benefits, alternatives, and any other detail to support their suggested expenditure.
2. Project Costing
Finance
Core to all capital expenditure request processing is the communication of the relative benefits of the expenditure. This step documents its cost and ongoing value. Costs are itemized and the residual value is recorded. It also provides an opportunity for the Finance team to comment on the request.
3. Management Review
Initiator Manager
Once the official costing of the project is complete, the Management team or Capital Expenditure committee can meet to discuss, review, and make recommendations based on the information. Once the expense is approved by the group, it can move to the final signoff from the CFO or CEO.
4. CFO Review
CFO
Capital Expenditure requests then flow through the office of the CFO for official approval. This step may then trigger a process within the office to include the expense in financial documentation.
5. CEO Approval
CEO
For unbudgeted or high-cost expenditure, it is common to route the request to the CEO for final approval. This step is as much about keeping the CEO informed of capital expenditure as it is about receiving approval.
6. Purchase Order
Finance
Finally, the Finance team can begin their own internal process to raise a purchase order for the asset. Once this is completed, the expenditure can be made.
