Steps to Building a Better Capital Budget

A business or organization is not going to be complete unless there is a decent source of working capital on hand. There are numerous ways of gaining working capital for your business that many are not yet aware of. 

Here are the few steps that help organizations create consensus about overall business values and priorities, use these to rate the value of capital projects, and ultimately the creation of capital budgets that deliver the greatest business value. You can also search the web to get more information about the leading advisory capital funding group.

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Step 1: Establish a Team

Define a core group responsible for establishing key goals, objectives, and responsibilities. The team will typically include representatives from Finance, Facilities, Operations, and Executive Management. 

Step 2: Create a Common Understanding

The members of your budget team will have different backgrounds, skills sets, and perspectives on the capital planning process. 

Provide them with "basic training" in the language of capital assets, including assessment terminology, asset and requirement categorization methods, cost estimation techniques, key performance metrics and how they are calculated, and requirements for various funding sources.

Step 3: Create the Budget

The capital budget process boils down to where your organization "draws the line" for funding. Invariably, there will not be enough to cover all your capital improvement projects. 

With a ranked list of projects by priority, it is easy to see what the current funding level will address, and what will be deferred till the next budget cycle.

Organizations can ensure that the squeaky wheel won't derail your capital strategy and that the capital investments it chooses will add the greatest possible business value and support organizational objectives today and in the future.