Why FP&A Should Be Involved in the Capital Planning Process

Firstly, at the front end, FP&A professionals bring the technical expertise in providing decision supports that involve capex projects – from developing future cash flows, analysing the project’s internal rate of return (IRR), net present value (NPV) or the payback period and even determining the appropriate financing structure for a capex project.

Next, the intimacy of FP&A professionals in the budgeting process positions them to properly contextualise the financial implications of capex projects. For example, if a capex project is meant to save the company costs, FP&A professionals are in a position to confirm (or even to ensure) that those savings are reflected in the budget at the right month or year at the correct level of detail. In other instances, FP&A practitioners can also confirm or contest if the benefits of a capex project (either savings or additional revenues) are being double-counted.

Finally, in certain organisations, capex projects are developed in certain silos within the organisation. However, FP&A professionals are in a position to have a holistic view of the organisation’s plan and as such can impact the enhancement of capex projects, making suggestions to eliminate redundant projects being pursued by different groups in a company.

FP&A professionals might also suggest the combination of seemingly disparate projects to save on costs and broaden the function of a project. For example, he or she may propose amalgamating the implementation of a customer relationship management (CRM) system by marketing, enhanced business intelligence and reporting by operations, budgeting by finance and workforce management by human resources into one coherent project that can save costs, ensure seamless connectivity among different department and promote teamwork across groups in an organisation.

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