How to gain visibility, efficiency and accuracy in your CapEx planning
Date: 19/12/2016

By Piers Wilson

It has been claimed that Albert Einstein once said that the definition of insanity is "doing the same thing over and over and expecting a different result".

And yet when it comes to capex planning, there's a less than ideal way of dealing with it - and unfortunately it's the way most of us continue to do it.

Sure, in an ideal world top level management would like greater visibility and transparency at an organisational level into how the business is replacing assets, and what's happening in your asset base.

Line of business, vying for those capex dollars, would also prefer to have a better chance at justifying their projects - getting their data in front of top management fast and making their case.

Likewise, the controller would be immensely happy to reduce the time collecting data, preferring to spend the time currently eaten up maintaining complex spreadsheets adding more value, by sitting down to liaise with line of business about why they need certain assets.

And of course, someone has to spend an inordinate amount of time inputting depreciation expense projections for P&L, asset capitalisation projections for your balance sheet, and cash projections for asset acquisition for cash flow - telling themselves, "better late than never!".

What if there was a way to increase efficiency when budgeting and forecasting your capex and transferring those projections into P&L, cashflow and your balance sheet, while adding timeliness, accuracy and visibility for top level management at the same time?

Expect a different result

PM2Plan, Cornerstone's financial budgeting and forecasting solution powered by IBM Planning Analytics - the next generation of TM1, contains additional modules which each create further accuracy and visibility into key areas and help you determine the primary drivers of expenditure in an organisation.

PM2Plan's CapEx module extends the OpEx function, not only adding game changing automation to your capex budgeting, making it simpler, faster, more detailed and less prone to error; it also brings a new strategic planning tool into your arsenal.

Top management gets a real time, top down view on what's being planned, and can generate efficiencies as a result, setting priorities and making sure projects get implemented in the coming periods. The controller eliminates the need for a huge amount of data collection, and line of business simplifies the collection/inputting process.

How?

PM2Plan's CapEx module allows you to take control of all the most critical, basic information to ensure it is managed from a central place. Defining asset types, codes, depreciation methods, and GL accounts to be used for the transfer of capex to opex for each asset, is maintained centrally and accurately by the Finance team. 

With this done, the work of inputting data into the system can be spread around a variety of cost centre managers who don't have to remember any of those details - which also means fewer mistakes.

An integration with PM2Plan's Headcount module even provides for high level assumptions to be translated into increases in hardware.

Interested in finding out more? Watch PM2Plan's CapEx video for further explanation.