Use BAP Software to Get CapEx Management and Procurement Working Together
Spend and cash flow management are always high on a CFO’s priority list. Because of the implications for finances, purchasing and expense management are typically also a high priority. Managing large-scale expenses typically takes center stage, but everyday expenses also play a big role in company finances.
For many years, most procurement teams focused on operational expenses (OpEx) rather than capital expenses (CapEx), which were managed by other departments. This made sense; most companies have more operational expenses (like printer paper, packaging materials, and raw materials) than capital expenses (like company vehicles, computers, or machinery). That could vary depending on industry—construction and manufacturing, for example, might have more of a CapEx focus—but for the most part procurement was synonymous with OpEx, and CapEx was treated as a separate—and sometimes more important—thing.
CapEx and OpEx are different types of purchases. Managing them requires different strategies. However, there is also a lot of overlap in the procurement process. When CapEx management and procurement join forces—particularly when they have support from robust Business Process Automation (BPA) software—the whole company can benefit.
OpEx and CapEx: Similarities and Differences
Both OpEx and CapEx refer to essential purchases your company makes. They just happen with different frequencies and have different price points. Managing the two types of expenses also requires different tools.
For operational expenses, there’s a relatively quick turnaround from procurement to payment to use of the purchase. Since operational expenses are typically used within a year, they’re tax-deductible during that year. In terms of BPA software, a procurement system that generates purchase orders is a big help for managing OpEx.
For capital expenses, purchase often requires research and collaboration between departments involved in deciding on the type of computer, vehicle, or other large expense. Payment may take place in installments. Since capital purchases typically last for years, they are depreciating assets that are tax deductible over several years. BPA software designed to manage CapEx projects is an asset when working with these types of expenses.
Procurement of both operational and capital expenses is key to company success. It makes a whole lot of sense for the procurement department to get involved with both OpEx and CapEx, even if there’s another team managing ongoing capital projects and expenses. CapEx project managers should be working closely with procurement teams.
Robust collaboration supported with accurate, up-to-date data is key to managing capital projects successfully. Implementing BPA software to enhance CapEx management is one key step. And when you align capital projects with procurement, you can streamline purchases associated with capital projects and gain increased control over budgets and cash flow.
Bringing procurement on board with CapEx projects is also a step toward giving procurement an increasingly strategic role in the company. The procurement department has a lot to bring to the table in terms of managing spend and cash flow, creating a sustainable supply chain, and building strong relationships with suppliers. Procurement departments—particularly those using BPA software—have access to vital data related to all types of purchases made within the company. This data can support the development of useful budgets and more accurate forecasts.
BPA software helps the procurement department become more flexible. By automating routine tasks, you free up employee time so they can learn additional skills. Procurement for CapEx isn’t exactly the same as for OpEx. For example, one difference is that CapEx expenses are one-time purchases while OpEx typically involves repeated purchases. Automating tasks like purchase order creation gives employees time to hone their CapEx procurement skills.
Types of BPA Software
BPA software is typically designed to manage specific types of business processes. Let’s take a look at what NextProcess software solutions offer for managing different types of expenses and procurement.
The Procurement & Purchase Order module gives you increased control over all purchases in the company. You’ll be able to use this software to set up punch-out and item catalogs that make it easy for employees to shop within the system for pre-approved items that align with your company’s purchasing policy. The system automatically generates purchase orders, making it very easy to use while also creating a digital paper trail that’s important for audits, record keeping, and data analysis.
The Capital Project Management module provides oversight and control when managing capital projects. You can use this module to track capital expenses and manage a variety of projects that require capital expenditures. The system updates in real-time and stores all the information related to each project in a central, digital location. This makes it easy for employees across your company to collaborate on projects. Capital projects are notoriously complex. Real-time data and collaborative work are key to keeping them on track and on budget.
Putting The Software Tools Together
While BPA software modules work well on their own, you’ll notice even greater benefits from linking up two or more modules to work together. One of the stand-out features of NextProcess is that all our software modules work seamlessly with each other and with your existing ERP. We offer the only true end-to-end solution for capex, procurement, budgeting, expense management, and payments.
You can roll the Procurement and CapEx software modules out across your whole company with ease. Employees with access permissions can log in to the cloud-based software from any internet-enabled device. This feature makes it easy for teams working from different locations to easily collaborate and access the same data.
Additionally, the software is very user-friendly. Once someone learns to use one software module, it’s also easy to transfer skills between modules and quickly pick up how to use them. Plus, there are no additional licensing fees for adding new users. You can grant access to the purchasing and/or CapEx system to as many employees as you like. You can also individually customize the level of access.
If you’re ready to put these procurement and expense management tools to work in your company, contact NextProcess today. You can set up a free demo and see first-hand how our software can support your company’s goals.