3 Reasons Leasing De-Risks Investments in Robotics
Published on 17 April, 2023 in Operational Excellence
With skyrocketing energy bills, supply chain chaos, high interest rates, staff shortages, and the cost of living crisis reducing consumer demand, UK businesses feel like they are being hit from all sides at the moment.
The economic outlook is challenging. Rising costs are squeezing profit margins forcing companies to charge higher prices or reduce output. In fact, the UK economy is the only G7 member yet to rebound to its pre-pandemic size.
Industries struggling include manufacturing, which shrank by 4% in 2022 and is expected to decline another 3.2% in 2023, and logistics, which saw low levels of new warehousing space requirements at the end of last year.
Companies looking to upgrade or expand are being held back by difficult economic conditions, in particular higher borrowing costs. When credit is cheap and readily available, businesses can make significant capital expenditure (capex) investments, transforming their operations to reduce costs in the long run or increase output and boost revenue.
For manufacturing and logistics companies, high interest rates reduce the viability of investing in new technologies such as collaborative robots (cobots) and autonomous mobile robots (AMRs). In competitive industries where productivity is key, this puts many operations at risk of falling behind the competition.
Thankfully, there is another option available.
OMRON offers leasing options to help businesses acquire market-leading equipment without the risks associated with capex investments during tough economic times. Leasing advanced robotic equipment provides critical financial and operational benefits for companies looking to upgrade their operations.
1. Improved cash flow efficiency
By changing from a one-off capex to a distributed operating expense (opex), businesses can streamline their cash flow and prevent going into the red. You no longer have to pay the total cost upfront, compromising your cash flow by depleting funds or borrowing money at high interest.
You get access to transformative technology while paying an agreed-upon monthly fee for the duration of your lease. It becomes another monthly expense helping your business maintain a steady cash flow.
The cost is spread over an extended period of time, and with effective cash flow management, you can match payments to your business's incoming revenue. Typically, you agree to a flat rate, paying the same fee month to month and simplifying budgets, or you negotiate repayments that are fixed to the business's income.
2. Preserved working capital
This frees up capital to invest in other core areas of your business or to build up reserves in case of emergency. These investments could help increase revenue streams. For example, expanding operations or hiring new staff to improve output.
Alternatively, businesses can keep cash on hand to improve organizational agility. Keeping funds available to quickly adapt to market changes or seize new opportunities as they become available.
3. Enables regular equipment upgrades
Because you don't pay to own the equipment and the contract comes to an end, leases offer businesses far greater flexibility. You aren't tied to a large depreciating asset that is complicated to sell. Once the lease is over, you are free to upgrade and find the best technology on the market for your current operations.
However, if the equipment fits your business perfectly and you don't want the hassle of transferring to a new system, you can agree to an extension or pay to own the asset outright at the end of the contract.
Robotics for manufacturing and logistics is a fast-moving industry. Leases allow you to stay ahead of the competition by always running the most up-to-date technology.
Calculating ROI
Still unsure if leasing is the right option for your business? Try our Robotics ROI calculator and discover how long it will take you to break even on your project. All you need is basic information related to your current processes:
- Number of employees per shift
- Shifts per day
- Annual cost per employee
- Other annual costs
- Number of robots
- Running costs associated with the robot
- The number of employees required post-robot integration
Conclusion
OMRON's financial services and leasing solutions offer you the flexibility to acquire cutting-edge technology without paying upfront and borrowing money in a difficult market.
At times like these, remaining flexible and diversifying risk is critical when investing in your business. We simplify the problem with a range of financial options to ensure you get access to the latest technology on your terms.
OMRON can guide you through the process from start to finish and help you unleash the true potential of your factory. To get started, you can set up a short, 15 minute chat with one of our experts to see if it can work for you.
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