Create better capital expenditure plans and unlock critical financial insights with Workday Adaptive.
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A capital expenditure plan is integral to an organization’s long-term financial strategy. However, traditional capital expenditure planning processes can be labor-intensive, tedious, and frustrating.
Enter Workday Adaptive Planning software. This platform can help your organization effortlessly navigate all capital expenditure planning phases through its intuitive interface, robust budgeting tools, and forecasting capabilities.
In this Workday Adaptive Planning overview, we examine capital expenditure plans, including what they are, why they are important, and how QBIX Analytics can help you create them with Workday.
Capital Expenditure Planning Optimized with Workday Adaptive Planning
Workday Adaptive Planning software is a cloud-based platform that provides a unified location for an organization’s financial data, including its capital expenditures. Workday features customizable workflows, advanced reporting capabilities, and an intuitive user interface.
The core capabilities of Workday Adaptive Planning include:
- Budgeting
- Forecasting
- Reporting
- Collaboration
- Integration
Workday’s sophisticated modeling capabilities are particularly beneficial during capital expenditure planning. With Workday, your organization can model and analyze expenses to perform long-term forecasting, estimate asset depreciation, and guide decision-making processes.
As an enterprise planning platform, Workday is scalable, flexible, and agile. It can adapt to the needs of a broad range of industries and enable your organization to stay a step ahead of its competitors.
When you have to make decisions at the speed of business and make every investment count, Workday Adaptive Planning is the tool you need to come through for your organization.
What Is a Capital Expenditure Plan?
Also referred to as a “CapEx plan” or “CapEx budget,” a capital expenditure plan is a budgeting tool used by businesses to manage, track, and prioritize long-term assets and investments, such as land, facilities, equipment, and vehicles.
A capital expenditure plan helps your organization ensure that its CapEx investments align with its strategic goals and provide a good return.
While operating expenses (OpEx) are tracked in a profit and loss statement, capital expenditures are documented on your balance sheet. Some common examples of capital expenditures include:
- Roof repairs
- Land purchases
- A new facility lease
- Vehicle or equipment purchases
The capital expenditure plan should lay out what CapEx expenses you incur and identify when you will make those purchases or investments. Additionally, your CapEx plan must account for depreciation.
Without the right set of tools at your disposal, maintaining this plan can exhaust your limited time and resources.
Let’s further examine some common challenges associated with capital expenditure planning and highlight how Workday Adaptive Planning will help you overcome those hurdles.
Challenges of Capital Expenditure Planning
The biggest hassle associated with CapEx planning is expense measurement. It takes time to accurately identify CapEx amounts, measure depreciation, and estimate the long-term costs of each investment. Failing to accurately account for long-term capital expenditures can negatively impact liquidity and threaten business continuity.
The unpredictable nature of capital expenditures further exacerbates the challenges of CapEx planning. When making large investments in assets such as equipment or facilities, your organization hopes to achieve a predictable, positive outcome. However, nothing is guaranteed in the world of business, and poor CapEx investments can lead to major losses.
Even the most skilled analysts and forecasters can get things wrong. To mitigate these risks, you must equip yourself and your team with robust forecasting technology that can analyze dozens of potential outcomes and scenarios.
Why Workday Adaptive Planning?
Workday Adaptive Planning software includes sophisticated forecasting and measurement tools that empower your business to track capital expenditures with exceptional precision. It also features advanced scenario analysis tools that you can leverage to mitigate risks and protect business continuity.
Additionally, Workday Adaptive Planning software includes easy-to-use reporting features, customizable workflows, and other tools designed to help your team get more done.
Workday takes the guesswork out of capital expenditure planning and supports faster, more advantageous decision-making. You and your team can easily collaborate in a shared digital workspace, communicate and distribute important information, and create a detailed CapEx plan.
Why Planning for Capital Expenditures Is Necessary
A well-designed capital expenditure plan is critical to your organization’s long-term success. Planning for capital expenditures is necessary because these investments are:
Long-Term
Capital expenditure investment decisions will have far-reaching impacts on your business. If your organization fails to create an effective capital expenditure plan, it may miss out on opportunities to increase efficiency, productivity, and profitability through strategic investments. A single missed opportunity can negatively impact the business for months or even years.
For instance, the current output capacity of your facility is primarily the result of previous CapEx investments. Imagine that you had failed to expand your operations or purchase new assets over the last few years. This inaction would hinder your ability to take advantage of new industry trends, stifling your growth and slashing profits.
Your company’s CapEx investments will drive the direction of the business. Wise spending can propel the organization toward its long-term goals and give it a definitive edge within your industry. That said, you cannot capitalize on emerging — and potentially fleeting — opportunities without first creating a detailed CapEx budget.
Irreversible
The irreversible nature of capital expenditures raises the stakes of these critical business investments. Without a CapEx budget, organizations may underspend on necessary assets or overspend on unnecessary ones. Over time, this can lead to increased maintenance costs, lower profits, and operational inefficiencies.
While some capital expenditures are reversible, changing course can be a costly proposition. For instance, selling a used piece of equipment could cause the business to incur a loss. The same concept applies if the organization attempts to quickly resell land or break a lease.
Assets that were customized to meet the company’s individual needs may be virtually unsellable. Therefore, the business must ensure that it is making wise investments.
Costly
Capital expenditures require massive budgets, especially for businesses in sectors like oil and gas, utilities, telecommunications, and manufacturing. A single asset can cost hundreds of thousands of dollars. Capital investments in built assets can tally in the millions.
Before making such a significant investment, organizations must count the long-term costs of the purchase and analyze how that expense will impact liquidity, efficiency, and business continuity. During this decision-making process, business leaders must also account for recurring operating and maintenance costs associated with the asset.
Depreciating Assets
Initially, capital expenditures increase an organization’s cumulative asset accounts. However, after assets are put into service, they begin to depreciate. Equipment depreciates at a particularly rapid rate.
Calculating depreciation over an asset’s entire useful life helps business leaders determine when they should repair the asset or replace it. Factoring depreciation into the CapEx budget also enables an organization to more accurately track assets and capital.
The Capital Expenditure Planning Process
At QBIX Analytics, we leverage a well-designed capital expenditure planning process that is designed to help our clients create a detailed CapEx budget and inform decision-making. Our process includes the following steps:
Perform a Client Assessment
Effective CapEx planning begins and ends with high-quality data. The first step to modernizing capital expenditure planning involves taking stock of existing processes, systems, and data sources. Working under an NDA, we’ll delve into your data, discuss your goals, and recommend effective planning solutions.
Create a Customized Capital Expenditure Plan
Next, we work with our clients to create a customized capital expenditure plan that we will integrate with Workday Adaptive Planning software. The plan, as well as the Workday dashboard, are tailored to align with your organization’s goals, objectives, and needs. This approach ensures that the final plan addresses your unique challenges and pain points.
Create and Analyze “What if” Scenarios
Workday Adaptive Planning software and QBIX Analytics deliver optimal value for clients by creating and analyzing a variety of what-if scenarios. We explore worst-case outcomes to determine how these critical events could negatively impact your organization. We then recommend risk mitigation tactics to insulate your business from events that would threaten its continuity and profitability.
Collaborate by Sharing Reports
We employ a collaborative approach that involves sharing data and reports with our clients and their stakeholders. Using Workday Adaptive Planning software, we provide real-time updates so that our clients are always apprised of their CapEx.
Monitor Plan Performance
Our team works together with our clients to monitor plan performance, inform decision-making processes, and adapt to evolving industry conditions. We believe in continuous improvement and use Workday Adaptive Planning software’s sophisticated reporting tools to refine CapEx planning processes.
The QBIX Solution for Capital Expenditure Planning
QBIX Analytics is a Workday Adaptive Planning solutions provider that specializes in implementing the full suite of Workday products, including its robust planning software.
We leverage Workday Adaptive Planning to help businesses like yours remove friction from capital expenditure planning processes. By taking advantage of the software’s collaboration, integration, budgeting, reporting, and forecasting capabilities, you can create a tailored capital expenditure plan that supports your long-term goals and objectives.
Why choose Workday Adaptive Planning and QBIX? Simple: Workday is undoubtedly the best CapEx management platform on the market. Workday Adaptive Planning provides you with a single source of truth to guide your decision-making processes, manage capital expenses, and optimize the return on every investment.
We provide value for your business by overseeing Workday implementation. We’ll help you expedite the deployment process, configure the software to align with your industry’s unique needs, and condense your time to value so that you can put Workday Adaptive Planning to work for your organization without delay.
Contact QBIX to Learn More
Capital expenditure planning is a critical function for any organization interested in making long-term investments in assets such as facilities, land, or equipment. By adopting Workday Adaptive Planning software, your business can streamline this vital process and access a centralized hub for forecasting, budgeting, and reporting.
You can use these insights to inform decision-making in regard to capital investments, achieve alignment between your goals and CapEx, and optimize your efficiency, profitability, and productivity.
Are you ready to learn more about the benefits of Workday Adaptive Planning and how it can support your capital expenditure planning processes? Contact us and let QBIX Analytics power your decision-making with Workday.
FAQs
Workday Adaptive Planning is a cloud-based solution that helps your business streamline budgeting, forecasting, reporting, and other financial planning functions. This centralized platform simplifies the process of creating capital expenditure plans.
Workday Adaptive Planning consolidates and centralizes your financial data so that all team members can share information, collaborate, and make decisions together.
Workday Adaptive Planning includes robust data analytics and reporting tools that enable organizations to leverage their financial data to inform decision-making. Workday includes tools for forecasting future spending needs, scenario analysis, and CapEx performance tracking.
Yes, Workday Adaptive Planning features advanced budgeting tools that can be used to create capital expenditure plans. You can set spending targets, track expenses over time, and allocate resources to specific projects or investments.
Yes, Workday Adaptive Planning can be tailored to align with your organization’s unique needs. You can customize data models, reporting capabilities, and workflows to maximize productivity.