Five years – that is how long it generally takes to get a return on your investment in an industrial robot or CNC machining center. That of course means five reporting periods, i.e. five balance sheets squeezed by capital expenditure. Finance and accounting departments may be willing to put up with this, but they would rather do without it. So it is no surprise that budgets for innovative projects with an uncertain return on investment are often tightly controlled.
Pay-per-use provides a solution to this dilemma. Regardless of whether you think in terms of capacity or unit costs, this model will make production planning and warehouse planning easier. Financial planning and reporting will become a whole lot simpler, too.
A frequently used, successful model based on unit costs is called ‘pay per engine hood’. In this model, we distribute the initial capital expenditure over the entire lifetime of the machine or piece of equipment, charging on the basis of each engine hood manufactured. As a result, the ROI is also distributed, so it materializes and is measurable from day one. This means that not only the profitability calculation but also the unit cost accounting, cost center allocation, and production planning will be far easier.
It also helps to create flexibility. Fluctuations in production levels (within an agreed time frame) do not impact on unit costs. The relocation of machinery and equipment is no longer problematic from a funding perspective. Investment in additional assets becomes much easier to cost and to implement.
But, in the end, the question is whether the price actually represents value for money. This can only be ensured by a technology and financing partner that is independent. That, over the decades, has developed its own robust benchmarks and profitability calculations – and, at the same time, has a business model that is as modern as that of a car sharing provider, for example. That sits on the same side of the negotiating table as you because it has the same objectives. That can also calculate the price for international projects. That will protect your balance sheet and take risks on your behalf.
Efficient Technology Management® that meets your requirements – this is what we offer. Contact us now and you will not have to wait five years for a return on your investment.
“Do you know how you will be using your machinery and equipment in five years’ time?”
“Do you know what proportion of your capital expenditure is actually accounted for by unit costs?”
“Do you know how to start generating a profit from your capital expenditure straightaway?”
“The digital economy calls for more flexible and faster financing models for capital expenditure. Pay per use is a prime example.”