Why Capex Governance Breaks Down in Mid-Market Companies (And How to Fix It Without Slowing Decisions)

Most mid-market companies don’t set out to have weak capex governance.

It usually starts with good intentions:

• Keep the business moving

• Trust experienced operators

• Avoid heavy bureaucracy

But over time, cracks appear.

Leadership starts asking questions like:

• Why was this approved?

• Who signed off on it?

• What assumptions did we use?

• Are we being consistent across investments?

And suddenly, it’s clear the issue isn’t people, it’s process.

The Real Problem: Inconsistent Justifications for Spend

In many organisations, justifications for expenditure are created ad hoc:

• One proposal has a simple payback

• Another includes an NPV

• Another references IRR

• Discount rates vary

• Assumptions aren’t comparable

There’s no shared standard for what “good enough” looks like.

That makes it almost impossible to compare decisions and governance becomes reactive instead of intentional.

When Thresholds Aren’t Clear, Governance Gets Messy

Another common issue is unclear delegation of authority:

• What requires a written justification?

• What can be approved via email?

• Where’s the line between a $1k, $100k, and $10M decision?

Without clear thresholds, people guess and finance ends up reconstructing decisions after the fact for audit, reporting, or leadership reviews.

A Simpler Way to Think About Capex Governance

Good governance doesn’t require heavy documents. It requires:

• Clear thresholds

• Consistent thinking

• Traceable approvals

• One place where reasoning lives

This usually means separating:

• Short-form justifications for routine or budgeted spend

• Longer-form investment decisions for material or transformational initiatives

Same structure. Different depth.

Where This Becomes Manageable

Tools like Riff help standardise how spending decisions are justified without forcing everyone into finance jargon.

Instead of finance policing quality at the end, the structure is built in from the start:

• Clear prompts

• Consistent assumptions

• Clean approval trails

The result is stronger governance without slowing the business down.