Capital Expenditure (Capex)

Capital expenditure (capex) is the money that a company spends on long-term assets, such as land, buildings, or machinery. This type of spending is typically done in order to generate future revenue.

A company will usually finance its capex through a combination of equity and debt. Equity financing involves the use of the company’s own funds, while debt financing entails taking out loans from third-party lenders.

Capex can also be financed through leasing arrangements. In this case, a company will enter into a contract with another party in which it agrees to make payments over a set period of time in exchange for the use of an asset.

Once a decision has been made to go ahead with a particular project, the next step is to procure the necessary goods or services. Procurement generally includes four key stages:

1. Planning and requisitioning: This stage involves identifying what is needed, when it is needed, and how much is needed. It also involves putting together the necessary documentation required to move forward with the procurement process.

2. Solicitation: In this stage, potential suppliers are invited to submit bids or proposals for the goods or services required.

3. Evaluation: The bids or proposals are then evaluated on the basis of factors such as price, quality, and delivery schedule.

4. Contract award: The supplier who provides the best value for money is awarded the contract.