Capital Asset Planning is included as a dedicated function

Description

Capital Asset Planning in Corporate Performance Management (CPM) software involves systematic planning of capital asset purchases, maintenance, and depreciation to effectively manage the organization's resources. This pre-built module aids in budgeting, forecasting, and decision-making processes by providing an accurate view of an organization's current and future capital needs.

Example Use Case

Scenario: A medium-sized manufacturing company uses Excel to manage its capital assets, which include machinery, infrastructure, and equipment. They regularly purchase new assets as they expand operations. This has required them to manage several worksheets and manually calculate depreciation for each asset. This worksheet is linked to other worksheets, making it difficult to maintain.

Solution: They purchase a planning tool with a purpose-built Capital Asset Planning function. This allows them to load existing assets into the tool, and plan for new purchases. Pre-built depreciation schedules can be easily selected, saving them from managing this in Excel. This tool then automatically rolls out the budgetary impact across the plan, saving them from linking various workbooks.

Considerations

The planning tool should encompass all aspects of capital asset management, including acquisition, maintenance, depreciation, and disposal. Many tools on the market will allow the user to add assets and select a depreciation schedule. Make sure they also capture disposal, salvage value, and so on. Those are important for Balance Sheet planning.

There may be cases where the pre-built module lacks a specific feature, say an asset type, that you'll need to plan for in the future. Make sure the module is not overly rigid, preventing you from customizing it as your business matures.

Lastly, consider the forecasting capabilities when activities like opening a factory, or a store, or anything that requires CapEx occurs. A system that can automatically populate CapEx requirements when one of those events is planned for is incredibly valuable from both a time savings and accuracy perspective.

Questions to Ask a Vendor

• Functionality: How comprehensive is your Capital Asset Planning function? Does it consider all stages of an asset's lifecycle?
• Integration: How well does the Capital Asset Planning function integrate with other modules such as budgeting, financial projections, and operational planning?
• Customizability: How much flexibility does your product offer in terms of customizing the Capital Asset Planning function to cater to our specific needs?
• Future-Proof: How does your system adapt to forecasting and planning for future capital needs?