Capital Expenditure Requests

by | Jun 5, 2020 | Process Templates

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 CAPEX request process is too important to allow ambiguity or overcomplexity to sneak in.

1. Project Details Initiator
The first step in any CAPEX 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 CAPEX 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.  
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 Management
Once the official costing of the project is complete, the Management team or CAPEX 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
CAPEX 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.
4. CFO Review CFO
CAPEX 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.
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.

This is an excerpt from Flowingly’s latest process guide, Essential Processes for Finance.

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