15 May Flexible finance reduces the need for CAPEX
As retailers grow they inevitably reach the stage where automation has to be considered for their warehouse. There are many tipping points for this – depending on individual businesses – however the need for greater accuracy and productivity, to cope with and enable growth and increased consumer demand, are nearly always the overriding factors.
Until recently automated systems both small and large have required capital investment before a system is installed and running. Consequently, ROI can take a number of years to complete, leading to delayed implementation or decisions based on cost rather than overall suitability, both for the present operation and likely future needs.
Some integrators now offer monthly payment contracts as a way of overcoming this. With automation costs closely linked to productivity, finance arrangements work well for businesses that are growing quickly, providing a flexible way for businesses of any size to tap into the latest equipment and technology. It also means they can follow a sustainable growth path with new functionality able to be added in retrospectively as and when required.
A monthly payment contract is exactly as it suggests; a contract which allows an organisation to make monthly payments over a determined length contract period, with the facility for the business to decide how long that contract lasts. It’s also a straightforward process to add more finance to the deal should the system need to be modified or added to further down the line.
This is known as a leasing system and the following benefits apply:
- Investing in this way can help conserve and control cash.
- This method also helps financial planning with predictable monthly payments.
- Because lease payments are seen as business expenses rather than long term debt, it can also improve the balance sheet and in some cases there can even be tax benefits too.
- By paying over time it almost becomes self-funding as the benefits a company gains from the investment may pay for the upgrade.
Conveyor Networks offer monthly payment options – marketplace retailer Range Plus took advantage of this method of payment to install a semi-automated packing and conveyor system to support their growth. Financing the system in this way has meant that 2 years on from the initial investment they are ready to upgrade the original system to a fully automated packing line.
Owner Abdul Ahad Khan says the step by step approach to automation has allowed him the confidence to know he can grow the business and manage it profitably.
“It has simplified our operations and the productivity we would achieve with 12 staff we are able to achieve with 9. There is a productivity increase of 25% and proportionate reduction in operating costs”.