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Product category: Industrial Drives/Controls
News Release from: Siemens Automation and Drives | Subject: Siemens Finance Operation
Edited by the Engineeringtalk Editorial Team on 08 August 2002

Finance schemes provide easy access to
ECAs

Following the UK Chancellor of the Exchequer's 2002 Budget, Siemens Automation and Drives is promoting the financing schemes that are available through its sister company Siemens Finance Operation.

Following the UK Chancellor of the Exchequer's 2002 Budget, Siemens Automation and Drives is promoting the financing schemes that are available through its sister company Siemens Finance Operation For businesses seeking to install modern energy-efficient equipment such as motors and variable speed drives, the financial savings (through reduced energy consumption) and enhanced capital allowances (ECAs) already make such investments attractive

Moreover, by using a finance scheme, the monthly payments are often be less than the value of the energy savings, so financial benefits are enjoyed immediately.

Many companies prefer to use a lease, lease-purchase or other finance scheme, rather than raising a separate bank loan or eating into a limited capital budget.

Arranging a finance scheme through Siemens at the same time as specifying the equipment can allow the hardware to be in place - and savings to be made - far more quickly than if a finance scheme were to be negotiated separately; it can also avoid having to pursue lengthy internal corporate procedures to secure approval for capital expenditure.

Once a Siemens finance agreement is in place, the interest rate is fixed and the customer is certain of what the monthly payments will be - which may not be the case with an advance from a bank.

ECAs have been available for (almost) as long as the Climate Change Levy (CCL) has been in place.

For a while there was some ambiguity over whether ECAs were available to companies that had not made a direct purchase of an item (capital equipment had to be owned by a company in order for the equipment value to be written-off against tax), but the Chancellor clarified the situation in the 2002 Budget: it is now the case that "expenditure incurred on designated energy-saving equipment for leasing within the ECA scheme can qualify for 100% enhanced capital allowances".

This announcement is welcomed by many companies that could see the long-term benefits of installing energy-efficient equipment, but, for one reason or another, were unable to make the initial investment.

As well as making direct financial savings, companies that lease equipment can now enjoy the same tax-related cashflow benefit as those buying equipment outright.

Siemens finds that many customers are incredulous that monthly payments against a finance agreement can be less than the value of the energy savings being made.

Steve Barker, Business Manager for Drives at Siemens Automation and Drives, states: "As a rule-of-thumb, if an investment in energy-efficient equipment will pay for itself through energy savings, we can probably arrange a two- or three-year finance agreement with monthly repayments that allow immediate savings to be made".

Steve Barker adds: "Once customers overcome the initial feeling of it's-too-good-to-be-true, they become very interested indeed.

Although it is so far only a small proportion of Siemens customers that use our finance schemes, the feedback is so positive that I am sure the proportion will grow significantly, especially in the area of energy-efficient electric motors and variable speed drives".

Schemes can be tailored to meet the needs of the customer, whether the investment is GBP 1000 or several million pounds.

Each contract is also drawn up to best suit the accounting and taxation requirements of the customer.

Depending on the exact terms, there could be further benefits beyond the term of the finance agreement.

For example, at the end of a lease the customer may have the opportunity to upgrade the equipment so as to take advantage of new technologies that have been developed.

This level of flexibility is simply not available to a customer that has purchased equipment outright.

If it often said that the only people who can afford to save money are those who can afford to spend it.

But with flexible finance schemes available from Siemens, virtually anybody can now upgrade to energy-efficient equipment and enjoy an immediate payback with the added cashflow bonus of the Government's ECAs.

More information about the various types of finance scheme is available from Siemens Automation and Drives.

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