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Capital Expense Management, Procurement, and Your Year-End Budget for 2022/2023
As we draw near the end of 2022, it’s time to start thinking of your 2023 budgets if you haven’t already. In the modern business landscape, things change so quickly that you can’t rely on last year’s budget when starting out the new year. It’s vital that you evaluate, plan, and budget for the new year, keeping in mind that budgets will likely require some flexibility.
Rising inflation, ongoing supply chain issues, and many other challenges face businesses heading into 2023. To effectively deal with those issues, you need ways to access data related to your company finances and manage financial processes efficiently. Business process automation (BPA) software is a vital aid in managing financial processes in a way that aligns with the budget and supports company goals.
Software to aid in managing procurement, accounts payable, and capital expenses gives you greater insight into cash flow and the tools you need to budget effectively. For today’s post, we’re going to focus on how Software-as-a-Service (SaaS) programs for capital expense management and procurement can work together to help with budgeting in 2023.
Get CapEx Under Control
This step doesn’t necessarily mean you need to reign in uncontrolled spending (though it can include that). Rather, we’re talking about finding ways to control and manage capital expenses effectively.
NextProcess’ Capital Project Management Software includes capital budgeting tools. When using this software, you can customize the whole system to fit your company’s individual processes and budget goals. Our CapEx software also integrates seamlessly with your existing ERPs and our other software modules, including the procurement software.
To learn more, read our article “Discover What You Need to Know about the Secrets to Efficient Capital Expense Management and Budgeting.”
Take Control of Procurement
If you’re not already using a Software-as-a-Service (SaaS) program to handle procurement, now’s a good time to consider updating. This model for managing procurement makes the whole process much simpler than using outdated software or trying to keep track of things manually.
Procurement software helps you handle Operational Expenses (OpEx). You might also use it when placing orders for Capital Expenses (CapEx), such as new computers. Having a reliable procurement system that gives you immediate insight into company purchasing as well as customizable controls makes managing procurement simple. It also makes it easier for employees to place orders that align with your company’s budget and purchasing rules.
You can get CapEx management software and purchasing software working together when you automate both with NextProcess. To learn more, read “Here Are 5 Big Advantages to Choosing a BPA Software Suite.”
Budgeting and Capital Expense Management
With ongoing economic challenges, many companies are seeking to cut back on their capital expenses. Depending on how your company is doing and what industry you’re in, this might not be the time to start large new projects requiring a capital expense. Even if you are cutting back, though, it’s nearly impossible to avoid all capital expenses. What if a printer breaks, or a computer stops working, or it’s not safe to delay the roof repairs?
Experts agree that the key to CapEx budgeting is to set a budget before starting any capital project or purchasing items/assets that span multiple accounting periods. This may sound obvious, but all too often capital expenses spiral out of control because people wait too long to try and figure out the budget. This can also happen when people don’t research the asset or project well enough to plan for every expense involved. According to McKinsey & Company, overruns of CapEx “estimates frequently exceed 50 percent … in both the public and private sectors.
Software-as-a-Service tools for CapEx management make it easy to set budgets and track related expenses. Another way that Capital Expense Management BPA software can help is in keeping track of ongoing projects. You’ll need to track CapEx projects to make sure they stay within max budgets and provide accurate data to inform budgeting.
Procurement, OpEx, and CapEx
It’s a good idea to budget for capital expenses and operational expenses separately. However, you don’t want them so separate that you can’t get a good look at where your money’s going overall. You need tools to manage the finer points of CapEx and OpEx separately, but you also need high-level insight into cash flow across budgets and for all company locations.
Improving oversight for all your cash flow is one reason it’s important to automate using a software system like NextProcess that seamlessly integrates between modules and with your ERPs. This integration provides increased insight and control over your cash flow, capital projects, and routine expenses.
Flexible, Iterative Budgeting
Budgets for the new year aren’t just something your company hammers out once and can ignore the rest of the year. It’s an iterative process that involves planning, bringing in data, consulting concerned parties, and setting realistic goals. Reliable data is the best place to start; you can’t budget effectively without examining performance metrics, resource allocation, and cash flow. SaaS software includes real-time reporting tools to help with that. Even if you haven’t yet automated, implementing SaaS software now can help set you up for more data-informed budgeting in the future.
Flexibility, visibility, and control are key to a useful budget. Improved visibility helps companies recognize when they need to be flexible in order to adjust or stay within budgets. Control over financial processes helps your company stay on target and manage cash flow. All together, reliable BPA software integrated with your company’s ERP provides the insight and control necessary to effectively manage capital projects as well as operational expenses. And those tools lay the groundwork for a flexible, data-driven budget that your company can take into the new year.
If you’re ready to see how capital expense management and procurement software can work together to support your company’s budgeting goals, contact NextProcess. We’ll be happy to answer any questions you have and provide a free demo so you can see first-hand how these SaaS modules work separately and together.