Flexible financing of future-proof investments

Strong global competition and economic fluctuations are just as much a challenge to the manufacturing industry as rising energy prices and the responsible use of resources. Investments in process integration are therefore investments in the future. DMG MORI's new Machining Transformation (MX) combines the four pillars of prozess integration, automation, digital transformation (DX) and green transformation (GX) for modern and sustainable manufacturing. Since innovative machine tools, holistic automation solutions and digitization products are sometimes very expensive purchases, financing solutions play a major role in such investments.

Increasing interest in leasing & co.

Effects on liquidity and creditworthiness as well as tax aspects account for the growing interest in alternative financing solutions. Although companies can negotiate discounts when purchasing investment objects, they flow directly into the balance sheet as acquisition goods. As an alternative to equity, bank credits and loans preserve the company's liquidity, but they reduce the credit line granted. In addition, they incur interest costs and it takes time to check whether a loan has been granted.

The Bundesverband Deutscher Leasing-Unternehmen e.V. (BDL) (Federal Association of German Leasing Companies) has recorded steady growth in new business in the leasing sector for many years. Declines have only occurred during major economic downturns. At the end of 2022, new customer business – in terms of leasing and installment plan – was worth 72 billion euros. Christian Bergemann also confirms this development: “We handle up to 50 percent of our customers' investments.” The financing volume has already grown to over 300 million euros per year, he adds.

DMG MORI Finance: Everything from a single source

In the case of DMG MORI Finance, Christian Bergemann also attributes the positive development to the fact that customers receive manufacturing solutions and financing from a single source: “In more than 30 countries, we combine the expertise of a financing company with the technical know-how and industry knowledge of the technology leader – a unique selling point in direct competition.” In addition, the bank-independent financing at DMG MORI Finance ensures that investing companies retain their creditworthiness with conventional financing providers.

DMG MORI Finance's financing models are designed to enable customers to modernize their production and increase capacities on the one hand. On the other hand, they conserve their capital and optimize their balance sheet through individual financing solutions. “Because the financing is paid from monthly generated sales, also known as pay-as-you-earn,” explains Christian Bergemann. At the same time, he says, investment provisions and leasing installments, for example, can be claimed for tax purposes. “To give customers time to develop the full productivity of the machine, there is also the option of conserving liquidity in the first six to twelve months with the help of reduced initial rates.”

A financing agreement through DMG MORI Finance only starts after the machine has been fully commissioned and includes additional accessories and services if required. This facilitates investments in products related to automation or digitization, for example. Services, i.e. crash insurance, inspections and maintenance, can also be included in the respective contracts. “Our knowledge of the industry also allows us to realistically estimate agreed residual values,” adds Christian Bergemann. If necessary, these residual values can be set at the highest possible level to reduce the customer's monthly burden and increase profitability. The realistic assessment of current market values and the group's own options for the further use of used machines also make these investment objects ideal security for DMG MORI within the scope of financing.

Financing solutions for every requirement

DMG MORI Finance's portfolio includes leasing, rental and installment plan solutions. “Leasing agreements are the most common approach because they allow very flexible decisions,” says Christian Bergemann. “The offer ranges from full to partial amortization to operating leases. Individual installment scales also contribute to the high flexibility.” In addition, “sale & lease back” is a special form of leasing: “It serves to raise capital independently of banks.” If a company owns DMG MORI machines, it can sell them to DMG MORI Finance at the current market value and simultaneously conclude a leasing contract for this amount. The machine therefore remains in production. “In this way, the customer can increase his liquidity in the short term without burdening his credit line at a conventional bank,” Christian Bergemann describes the benefit.

With variable contract terms, the DMG MORI Finance rental model is aimed at customers who want the flexibility to increase their capacity at any time, even when their machinery is working at full capacity. This means that state-of-the-art technologies are available to them at short notice. “This can be interim financing to bridge a longer delivery time of new machines with models available at short notice. But budget restrictions are also often a decisive reason for renting machine tools,” says Christian Bergemann, explaining the decision to rent. Flexibility is also a priority here, he adds: “If the order level rises at the planned end of the rental period, there is the option of acquiring the machine via another financing option.”

With lease-purchase, DMG MORI Finance has a serious alternative to leasing in its portfolio, especially if customers are keen to have the new machine capitalized on their balance sheet. On the one hand, lease-purchase enables the release of investment reserves, and on the other hand, it fulfills the basic prerequisite for the disbursement of subsidies. The value-added tax due at the beginning can be deferred if required.

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