How manufacturing companies strategically plan investments and reduce financial requirements Why this topic is crucial: In manufacturing companies, fixed assets often account for over 50% of total capital.Every investment decision influences cost structure, capacity and liquidity over many years – and thus directly affects competitiveness.This guide shows you how to manage your fixed assets strategically, transparently and affordably – from defining your goals to financing. The blog is available in both a fold-out and a full view. Enjoy reading! 1. No success without a goal – why investments need a clear strategy Investments have a long-term effect. Without clear objectives, they often lead to: Inefficient capital commitment Incorrect capacity decisions Increased funding pressure An investment strategy can assist you in this regard: Planning capacities and technologies in a timely manner Make efficient use of financial resources Minimising risks such as obsolescence or bad investments Practical tip:Derive your investment strategy consistently from your corporate and production strategy. Guiding questions: What capacities are needed and when? Which technologies are future-proof in the long term? What is the realistic financial scope available? 2. Prioritise investments correctly – these 4 categories have proven themselves Statutory investments required by lawExamples: Environmental regulations, occupational safety→ highest priority→ Risk: penalties, production downtime Maintenance investments Examples: Replacement of defective machines→ also top priority→ Risk: unplanned downtime, high repair costs Improvement investmentsExamples: Increased efficiency, new technologies→ medium priority→ Risk: competitive disadvantages Expansion investmentsExamples: capacity expansion, new factory buildings→ strategic, but secondary→ Risk: missed growth opportunities Prioritisation checklist: Legal requirements checked? Maintenance backlogs identified? Efficiency potential analysed (costs, quality, time)? Expansion requirements aligned with sales strategy? 3. Creating transparency – managing investments professionally Effective investment management is based on a few clear principles: Linking maintenance investments and repair costs Use of historical data as a basis for budgeting Consideration of realistic price developments Use of key figures such as payback period or NPV Benchmarking between locations Multi-year projects (e.g. new factory buildings): Budgeting in realistic annual instalments Regular monitoring of progress and cash outflow Foreign currency investments: Exchange rates can change budgets by 10–20% Hedging, e.g. via natural hedges or forward contracts 4. Preserve liquidity – these models reduce financial requirements Lease Advantage: low initial investment Disadvantage: higher overall costs, IFRS accounting required in some cases Sale-and-Lease-Back Advantage: Release of capital, balance sheet relief Disadvantage: IFRS requires accounting Pay-per-use models Advantage: Costs based on actual usage Disadvantage: Dependence on the provider, higher costs Important:These models usually increase overall costs, but enable faster growth due to lower liquidity requirements. 5. Common mistakes in investment planning – and how to avoid them Overly optimistic price assumptions in the budgetProblem: Overly optimistic price assumptions lead to budget overruns and, in the worst case, to ad hoc financing with high costs.Solution: Use historical data and plan for a reserve that is not directly allocated. Overly cautious price assumptions in the budgetProblem: Overly cautious price assumptions lead to unused funds and, in the worst case, higher prices.Solution: Use historical data and plan for a reserve that is not directly allocated. Short-term cost-cutting measures at the expense of the futureProblem: Maintenance or improvements is postponed to preserve liquidity – later on, there is a risk of expensive emergency repairs or a loss of competitiveness.Solution: Clear prioritisation based on KPIs such as payback or NPV. OverinvestmentProblem: When there are multiple locations, several locations often want the same or similar investments.Solution: Derive a clear location strategy from the overall strategy – take risk aspects such as failures into account. Lack of risk hedging for foreign currency investments Problem: Exchange rate fluctuations can make projects considerably more expensive. Changes of 10-20% are entirely possible. Solution: Use natural hedging or, if this is not possible, derivative financial instruments. 6. Subsidies & taxes – How to save money Investment grants (e.g. KfW, regional programmes) Special tax depreciation allowances Subsidies for energy efficiency and sustainability Checklist: Have you researched subsidies? Tax advisor involved? Energy efficiency potential assessed? 7. Digitalisation in investment management Modern tools enable: Real-time monitoring of budgets Simulation of ‘what-if’ scenarios Data-based prioritisation of investments Practical tip:Start with pilot projects or trial versions – digitalisation does not have to be complex. Develop a digitalisation/AI strategy. 8. Conclusion – how to optimise your fixed assets sustainably A clear investment strategy: Reduces capital requirements and financing pressure Increases transparency and controllability Strengthens your company’s resilience to crises The most important levers: Prioritise investments by type and urgency. Monitor the status regularly (e.g. monthly investment controlling). Take advantage of subsidies, tax benefits and digital tools. Investments have a long-term effect. Without clear objectives, they often lead to: Inefficient capital commitment Incorrect capacity decisions Increased funding pressure An investment strategy can assist you in this regard: Planning capacities and technologies in a timely manner Make efficient use of financial resources Minimising risks such as obsolescence or bad investments Practical tip:Derive your investment strategy consistently from your corporate and production strategy. Guiding questions: What capacities are needed and when? Which technologies are future-proof in the long term? What is the realistic financial scope available? Statutory investments required by lawExamples: Environmental regulations, occupational safety→ highest priority→ Risk: penalties, production downtime Maintenance investments Examples: Replacement of defective machines→ also top priority→ Risk: unplanned downtime, high repair costs Improvement investmentsExamples: Increased efficiency, new technologies→ medium priority→ Risk: competitive disadvantages Expansion investmentsExamples: capacity expansion, new factory buildings→ strategic, but secondary→ Risk: missed growth opportunities Prioritisation checklist: Legal requirements checked? Maintenance backlogs identified? Efficiency potential analysed (costs, quality, time)? Expansion requirements aligned with sales strategy? Effective investment management is based on a few clear principles: Linking maintenance investments and repair costs Use of historical data as a basis for budgeting Consideration of realistic price developments Use of key figures such as payback period or NPV Benchmarking between locations Multi-year projects (e.g. new factory buildings): Budgeting in realistic annual instalments Regular monitoring of progress and cash outflow Foreign currency investments: Exchange rates can change budgets by 10–20% Hedging, e.g. via natural hedges or forward contracts Lease Advantage: low initial investment

How SMEs can free up liquidity – optimize working capital My working capital is too high – what should I do? Excessive working capital ties up liquidity, increases financing requirements and raises operational risks. Active management is therefore a key success factor, particularly for SMEs with limited financing options. In this article, you will learn: What exactly is working capital? What levers are available for optimisation What risks should be considered and Which key figures you can use to manage your working capital professionally. The blog is available in both a fold-out and a full view. Enjoy reading! 1. What is working capital? Working capital is calculated as follows: Inventories + receivables – liabilities It describes the capital tied up in operational business that is necessary to maintain the business model. There is often talk of core working capital. This can be supplemented by other receivables and liabilities. However, these items can usually only be influenced to a limited extent, as they are often subject to legal requirements and late payments can result in penalties or interest. 2. Optimise inventories – the biggest lever In manufacturing companies, inventories are divided into three categories: Raw materials, consumables and supplies (RCS) Semi-finished products Finished products High inventory levels not only lead to tied-up capital and higher financing costs, but also to: Increased storage and handling costs Obsolescence and depreciation risks Price and sales risks 2.1 Targeted management of raw materials, consumables and supplies Proven optimisation measures include: Consignment warehouse with suppliers For sustainable results, a structured analysis is recommended: ABC analysis A items: high value, low quantity → low stock levels, frequent replenishment B items: medium value → regular review C items: low value, high quantity → larger order quantities XYZ analysis X article: stable consumption, easily predictable Y-articles: fluctuating consumption (e.g. seasonal) Z items: irregular, hardly predictable consumption Combined ABC/XYZ matrix (practical approach) AX: Just-in-time, minimal stock levels AY: forecast-based procurement AZ: individual single-item planning CX: large order quantities CZ: no stockpiling if possible Important: Any optimisation must take supply chain security into account in order to avoid production interruptions. 2.2 Semi-finished and finished products Semi-finished products are an essential component, particularly in modular manufacturing and plant engineering. Finished products are considered particularly sensitive: o Reduced capacity utilisation worsens the cost structure o High inventories increase obsolescence and price risks Close coordination between sales, production and planning is crucial here. Possible measures could include, for example: Increase in inventory turnover (e.g. sales promotions for slow-moving items) Dropshipping in retail (direct shipment from supplier to customer) 3. Optimise receivables – secure liquidity The amount of accounts receivable is largely determined by payment terms. These reflect market practices and negotiating power. Austria / EU: usually 30–90 days Asia: up to 240 days in some cases Long payment terms tie up capital and increase the risk of default. Recommended measures: Short, clearly defined payment terms Define payment terms based on customer creditworthiness Consistent receivables management (dunning process, escalation levels) Targeted use of discounts (effective but expensive) Factoring as an alternative, especially for customers with strong credit ratings 4. Strategically managing liabilities Liabilities are the mirror image of receivables. Basic rule: Payment terms for suppliers should be at least as long as those for customers. Discounts are usually economically attractive Nevertheless, payment dates should be consciously managed with regard to balance sheet dates and key figures. 5. Key performance indicators for management purposes The most important key figure is the cash conversion cycle (CCC). It shows how long capital is tied up in the operating process. Components of the CCC Days Inventory Outstanding (DIO) – Storage period Days Sales Outstanding (DSO) – Accounts receivable turnover Days Payables Outstanding (DPO) – Supplier payment terms Overview of KPI KPI Formula DSO (Receivables / Turnover) × Days DIO (Stock / Turnover) × Days DPO (Liabilities / Purchases) × Days CCC DSO + DIO – DPO 6. Manage working capital sustainably Effective management requires: Clear target values for each KPI Regular reviews with those responsible, e.g. sales, supply chain Understanding within the organisation that working capital is not purely a financial exercise, but rather an operational success factor Benchmarking with competitors or peer groups increases transparency. AI-supported analyses for inventories are particularly efficient in complex manufacturing processes and replace time-consuming manual evaluations. 7. Conclusion Working capital is one of the biggest drivers of financing requirements, alongside fixed assets. Targeted optimisation: Reduces capital requirements and financing pressure Reduces operational risks (obsolescence, bad debts) Improves transparency and controllability The following factors are crucial for success: Clear prioritisation of measures Quick wins to increase acceptance Sustainable anchoring within the company After a successful optimization round, the focus shifts from further cost savings to fine-tuning and consistent management. Working capital is calculated as follows: Inventories + receivables – liabilities It describes the capital tied up in operational business that is necessary to maintain the business model. There is often talk of core working capital. This can be supplemented by other receivables and liabilities. However, these items can usually only be influenced to a limited extent, as they are often subject to legal requirements and late payments can result in penalties or interest. In manufacturing companies, inventories are divided into three categories: Raw materials, consumables and supplies (RCS) Semi-finished products Finished products High inventory levels not only lead to tied-up capital and higher financing costs, but also to: Increased storage and handling costs Obsolescence and depreciation risks Price and sales risks 2.1 Targeted management of raw materials, consumables and supplies Proven optimisation measures include: Consignment warehouse with suppliers For sustainable results, a structured analysis is recommended: ABC analysis A items: high value, low quantity → low stock levels, frequent replenishment B items: medium value → regular review C items: low value, high quantity → larger order quantities XYZ analysis X article: stable consumption, easily predictable Y-articles: fluctuating consumption (e.g. seasonal) Z items: irregular, hardly predictable consumption Combined ABC/XYZ matrix (practical approach) AX: Just-in-time, minimal stock levels AY: forecast-based procurement AZ: individual single-item planning