What is the Process of Capital Budgeting?
If you have ever taken a step back to ask yourself, is this project worth the time, money, and manpower it will take to execute it?, you are probably somewhat familiar with capital budgeting. Capital budgeting is a way for businesses to determine the most beneficial investment options for their assets, and make educated decisions about their long-term expenditures.
As an example, let’s look at your local high school.
Your local high school of 2,000 students wants to invest in a new gymnasium floor. Capital budgeting for this project involves 3 steps:
- Recording the cost of the investment
- Projecting the cash flow of the investment
- Comparing these projected earnings with inflation rates and the time value of the project.
Let’s say the new gymnasium floor will cost $10,000 and that the school generates around $4,000 in basketball ticket sales a year. At this rate, it will take the high school two and half years to pay back the investment, excluding the costs associated with inflation and time value.
Whether or not this investment is worth it to the school is something that the administrators and stakeholders will have to determine based on their annual budget, available labor, and other factors.
A Capital Budgeting Process That Makes Sense
What is your capital budgeting process? How effective is it? Is it time-consuming, error-prone, or outdated?
SchoolDude’s cloud-based software addresses those issues by providing schools all over the world with a better capital budgeting process.
SchoolDude has been developing software for school asset-managing since 1999 and is now the market leader. Our user-friendly software solutions can better manage your budget in a number of areas:
- Maintenance. Prioritize tasks based on cost and easily track where every last dollar is spent.
- Inventory. Watch your inventory budget update in real-time as transactions happen.
- Energy use. Schedule regular maintenance tasks and track your ENERGY STAR ratings.
- Field trips. Budget gas mileage and driver rates for school trips or extracurricular activities.
- Technology. Track labor costs and work order completions to gauge how and where your IT dollars are being spent.
- Scheduling. More efficiently schedule your facilities for outside use and maximize revenue.
- Utilities. Centralize all utility expenses to more closely monitor your bills.
- Facility forecasting. Predict future maintenance, upgrades and replacements of facility equipment to stay ahead of the curve.
SchoolDude’s capital budgeting process saves you time by automatically charting your budget in real time from department to department. There’s no paper filing system so costly errors are stamped out. And, the cloud-based nature of our software makes it easy to use from any location on any device with an internet connection. Best of all, our scaled-to-size pricing means affordability for every budget.
More than 6,000 public and private schools, colleges and universities have used SchoolDude to manage their budgets and our clients save an average of 70-80% over a five-year period compared to other systems. Take a look at all the different ways SchoolDude can improve your capital budgeting process.