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Capital Expenditure or CapEx are those long-term investments in assets that help businesses operate in their day-to-day tasks and that allow them to grow. Such an important part of a company’s strategy requires an organized and streamlined process – with Power Platform. You can have your in-house platform to manage your CapEx!
Power Automate and Power Apps can be used to build an end-to-end process that covers data input, tracking, approvals, transfer to your accounting system, and any other platform in the middle. In this blog we’ll talk about how our Power Platform consulting services have helped clients to improve and centralize their CapEx Management process.
What is CAPEX Management?
CapEx Management allows you to evaluate, prioritize, plan, control, and execute capital expenditure projects.
Key Objectives of CAPEX Management
- Evaluate and approve investments: track different attributes for your investment projects and make sure all approval steps are correctly identified and logged.
- Prioritize projects: identify the most important projects that align with your business strategy.
- Plan accordingly: define start dates and resources and identify any gaps in advance.
- Control and optimize: do not lose visibility of any aspect – cost, timeline, tasks, and project team.
The CAPEX Management Process with Power Platform
As Microsoft states, the Power Platform tools are better together, and when used for CapEx Management, this so-called “better together” motto really comes to life! By combining Power Apps and Power Automate, we have created robust and streamlined CapEx management systems. Some features we have implemented are:
Step 1: Input Request Information
Using a Power Apps interface, project ideas can be gathered to record all types of attributes: project name, assigned department, start date, project leader, estimated budget and forecast, classification, and project duration. The interface can be built with many validations to ensure correct and accurate data entry (i.e., make sure project dates are correct, valid project leaders are selected, the budget threshold for logged-in users, and much more!).
In combination with Power Automate automatic notifications can be sent to CapEx Admin so they are in the loop of all newly submitted projects.
Step 2: Submit Supporting Documents
Depending on the project type or budget, there may be different document requirements – project justification, Gantt timeline, or detailed budget. Using Power Apps, users can submit documents to attach to the project so approvers or Stakeholders can review them at any point. Validation can be added to indicate which documents are required and which are optional based on your own rules.
Power Automate can be used to send reminders to project leaders when any key document is missing so they can upload it before submitting it for approval.
Step 3: Fill Out Financial Details
Tracking is really important for a CapEx management system, and with Power Apps, a screen for the project team to enter monthly details of forecasts can be built.
Once a project is in progress, this screen can include a section for the finance team to enter actual expenses against the project – or even better: sync costs from your accounting system, let Power Automate connect to your ERP to extract expenses recorded for the project code and automatically enter them for the most recent period.
Step 4: Submit Requests for Approval
Once all information is in and the project team is ready to submit, Power Automate can handle the approval stages – whether you have simple or complex routing rules.
A workflow can be built to retrieve a list of one or multiple approvers that need to review the project in parallel or sequentially – the rules can be a combination of a single attribute or many of them: company, department, category, or budget amount.
Step 5: Follow-Up and track Financial Details
Take it to the next level by not only having a beautiful interface to manage the data input tasks and workflows – adding an amazing dashboard with valuable insights to track actuals, budget, and progress!
Overcoming challenges and common issues in CAPEX Management with Power Platform
Power Platform to the rescue
Delays in approvals – Power Automate can help in sending automatic notifications and reminders to let approvers know they have projects requiring their attention
Lack of visibility into project financials – Use Power BI to track all things CapEx: budget, forecast, potential overruns, actuals, and execution progress
Overruns and poor forecasting accuracy – With Power Automate, a workflow can be built to send a notification once a project reaches a certain percentage of Actuals vs Budget ratio. A tailored report can also be built with Power BI to list all projects that meet specific criteria and that need to be monitored.
Best Practices for Effective CAPEX Management
- Define standard approval rules: you can use one or many attributes from your projects or set one or multiple approvers based on these attributes but it’s important to have those rules in writing and very well documented. With Power Automate, an approval workflow can be built around these rules and allow automatic routing for approvers to receive approval requests.
- Identify required and optional documents: we’re talking about long-term investments, so it’s really important to keep up to date with all supporting documentation; with Power Apps, these kinds of validations can be built so users can easily see which documents they’re missing.
- Implement validation rules for data input: from ideas gathering to tracking financial details it’s really important to make sure that your users will only input valid data. For example, not allowing to modify budget values, previous periods’ expenses, or approval logs. Power Apps’ Canvas Apps are a great tool for building all types of validations with a user-friendly interface.
Power Platform Tools for CapEx Management
The Power Platform comes to the rescue along with other Microsoft technologies to save you from data that is all over the place, missed deadlines, overruns, and lost approval logs:
Dataverse or SharePoint
- Use Dataverse as a data repository to record all attributes and details of all investment projects. Dataverse is a Premium data source for Power Apps so you will require additional licensing to use its full capabilities. For a data source that can be used as part of your existing Microsoft subscription, use SharePoint Lists.
- Documents can be stored and shared in SharePoint to allow all relevant parties to look and collaborate around these documents.
Power Automate
- Power Automate is the orchestrator of the whole end-to-end process:
- Send automatic notifications to approvers when there is a new projects that requires review – you can add many layers of complexity to this approval routing rules (threshold, department name, etc)
- Send automatic reminders to approvers, staff or relevant parties for projects waiting for too long
- Integrate with your accounting system and create projects once they approved so expenses can be tracked against them (Zoho, Oracle, Quickbooks)
- Sync Project code and expenses back to your datasource. Data can be extracted from your accounting system to extract the total of expenses recorded for projects and update Dataverse or SharePoint with this data.
Power Apps
- A user-friendly interface can be created in Power Apps to allow users to input all attributes and project details.
- Add validations to make sure correct and accurate data in added to the system
- Power Apps can connect to Dataverse, SharePoint or any SQL Server Database you may be already working with.
Power BI
- Track all relevant attributes for CapEx projects and get valuable insights:
- Projects delayed or on track
- Potential budget overrun
- Pending approval
- Actuals vs Forecast
Additional CapEx Management System Features
Some processes require additional features and custom functionality added. Some of what we have built is:
Multi-level approvals
Imagine you have multiple companies, departments, and different project thresholds. Each of those different combinations can have from three to twelve approvers – even if it sounds like many layers of complexity, Power Automate can handle dynamic rules and conditions to extract the list of approvers and the order of approval to let the approvers know when it’s their turn to approve CapEx projects.
Tracking budget overruns with automation
An important part of a CapEx Management system is making sure cost and budget stay at reasonable levels. If there is any project that reaches a certain allowed threshold, someone needs to approve the additional resources.
By combining Power Apps and Power Automate, these numbers can be tracked, and a new approval request can be initiated for the additional cost. With Power BI, project financial data can be tracked and flag any project that exceeds a reasonable Actuals vs Budget ratio.
Multi-currency
When using Dataverse as the data repository for Power Platform solutions, multi-currency is an out-of-the-box feature that is enabled in a table when a column of “currency” type is created. Once we add historic currency rates to the Transaction Currency table, Dataverse will automatically do all the conversion work, and all transactions will be converted to the base currency defined at the Power Platform environment level. This can be leveraged if your company handles multiple currencies.
But if a different data source is being used – don’t you worry! A CapEx Management system can still be connected to a custom table of currency rates and perform calculations either in Power Apps, where users input project details or in Power BI, where they will see all data consolidated in a single place.
Conclusion
Power Platform is a great alternative to building a CapEx Management system that goes from using standard features to functionality that is tailored to very specific business needs. Contact us to know how we can help you create an in-house solution to manage your Capital Expenditure (CapEx) process with our Power Platform consulting and development services!
