CapEx Planning and true automation
All organizations need a comprehensive plan of operation, as well as a budget for its execution. This budget will generally deal with operational expenditure, project revenues and fixed and variable costs. However, the company may also need to pay for larger assets to help with operation, and these assets will need to be accounted for over more than one financial period. This is known as capital expenditure (or CapEx for short) and typically requires its own budget. One can imagine that the amount and diversity of assets that a company owns, dramatically increases the complexity of the process.
- Careful data gathering
- Determine the asset's profitability and lifetime
- Data management
- Cost allocation
- Gather data: performance data, likely lifespan, operating costs and purchase price
- Determine allocation of asset's costs
- Determine how the costs can be writed off
- Analyze the impact of asset purchases
OneStream's Capital Planning Solution
A CapEx register enables you to plan accordingly, analyze the accompanied depreciation and plan for the cash flow impact when replacing the relevant asset. When carrying this out in Excel, one faces a high risk of manual errors and it becomes hard to trace and correct such mistakes. In some cases, this is the reason to choose for a simple allocation model whilst assets are used for different products, projects or even by more entities. With an integrated solution, it is possible to maintain one single truth. As the allocation is executed automatically, one can even choose to use flexible (cost-)drivers. The register gives insight in the actual profitability and enables you to plan accordingly to achieve your strategic goals.
In traditional EPM tools, one would have to add details of every asset into the application’s master data structures. This is an approach with high maintenance costs and it is still prone to manual errors. OneStream's unified EPM enables you to have an asset register, track investments over time and apply depreciation models on individual assets, whether it’s a straight line or some sophisticated curve model.
The asset register, with all its details such as dates, text, investments, useful life, depreciation model, enables you to keep everything in one place. You can change any of these attributes on a specific item and quickly see the impact this will have on the financial statements.
Moreover, OneStream enables you to drill-back from the financial statements right back to named assets, or named CapEx projects. This feature reduces the risk of errors significantly and makes it much easier for FP&A staff to explain the outcomes.