Capital investment budget

Here you will learn how to configure the application to generate capital investment budget of the enterprise and how to commission fixed assets.

With the subsystem tools, you can get flexible solutions depending on the industry you work in and your company's management methods. You can export the budgeting model and its basic catalogs (budgeting scenarios, budget profiles, budgeting steps, and so on) to a file and import them to another infobase. Along with the standard configuration, you get a file with a budgeting model example. Below you can find recommendations on how to set up the application based on the economic theory and best practices.

An underlying approach to planning is to develop a multi-factor and interrelated model of financial plans. This principle allows you to carry out the factor analysis of received values and make changes to financial plan values with minimal labor costs. In other words, one or several system sources must be used to calculate each new amount. If you cannot use system data as it does not exist or is not reliable, you can enter required data manually.

Before you continue with the setup, we recommend that you configure:

• Basic settings of financial planning

Capital investment budget includes financial plans related to:

1. Construction of new assets both with in-house resources and with the help of a construction contractor. Tests and R&D are also included in this category.
2. Purchase of finished assets from a vendor, including transportation and registration expenses.
3. Reclassification of capitalized expenses as a long-term asset (commissioning).

Payment terms in construction are often non-standard, so we recommend that you register time distribution of the cash flow related to investment activities within the capital investment budget. This will ensure high accuracy of planned data, allow you to apply non-standard payment terms, and record the payment of additional services related to the acquisition of investment objects. Payment amount is usually VAT inclusive. Adjust the amount for the VAT amount.

Step 1. Generate a structure of budget flow items. You can use budget flow items to create a structure of the capital investment budget. Additionally, create required cash flow items by the investment activities. You can find out how to create items of the cash flow budget in the respective section.

Step 2. Generate a list and a structure of budget data related to the cash flow budget. Note that a data structure must be created based on the enterprise policy of financial planning and budgeting.

Step 3. Set up rules to request information from system sources.

Once you set up the application, the financial planning subsystem is ready for use as a tool for financial planning of the capital investment budget.