Machine Financing Pay-per-use — an alternative financing method for machine purchases?

Editor: Alexander Stark

Austria — In times of economic fluctuations and noticeable weaknesses of companies in the supplier industry, new strategies are needed to keep companies competitive and make their productivity more efficient. Read here how the machine manufacturer Zimmer & Kreim is approaching companies with new ideas.

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With its pay-per-use model, Linx4 wants to overcome investment hurdles.
With its pay-per-use model, Linx4 wants to overcome investment hurdles.
(Source: Linx4)

Fluctuations in orders inhibit the willingness of many production companies to invest and thus the innovative strength of the business location. The reason for this is as simple as it is serious: while sales can be very volatile, repayment rates for machinery and equipment remain constantly high and can cause liquidity bottlenecks.

Austrian fintech Linx4 addresses this dilemma with innovative financing models that enable true utilisation-based repayment for machinery purchases. In this way, the company aims to overcome investment hurdles for manufacturing companies and gives machine manufacturers from the cooperation network a decisive advantage in international competition.

Pay-per-use “will be another way of providing production capacity in the future without having to make a direct investment, with all its disadvantages”, says Michael Huth, head of salses and marketing at Zimmer & Kreim.
Pay-per-use “will be another way of providing production capacity in the future without having to make a direct investment, with all its disadvantages”, says Michael Huth, head of salses and marketing at Zimmer & Kreim.
(Source: Zimmer & Kreim)

Pay-per-use financing reduces the utilisation risk of the buyer, preserves their liquidity and additionally achieves positive balance sheet effects under IFRS16. At the same time, it increases the sales opportunities of the machine manufacturer. On the one hand, because the flexible financing model enables operators to provide production capacity without having to make a direct investment — and on the other hand, because higher after-sales revenues can be achieved. “Unlike traditional banks, linx4 combines modern financing with innovative risk management and actively goes to market with machine manufacturers. This is exactly what business people expect from modern financial services! With this in mind, we are already looking forward to many joint projects and successful cooperation,” says Michael Huth, Head of Sales and Marketing at Zimmer & Kreim, in praise of the cooperation with Linx4.

“Zimmer & Kreim is one of the typical mechanical engineering companies from Germany that always manages to bring new and efficient production machines to the market through inventiveness and courage,” says Bruckberger, describing the new partner. This time, however, Zimmer & Kreim is not bringing a new technology to the market, but has discovered a new business model for itself and its customers: “pay-per-use” — where the repayment of the machine depends on actual use. “We have already gathered initial positive experiences in connection with pay-per-use with our customers. Now we are pleased to have found an innovative financing partner like Linx4, who will roll out the pay-per-use concept with us,” says Huth about the newly acquired partner.

Pay-per-use financing, based on secure Industrial Internet-of-Things (IIoT) technology combined with financing via a machine fund, is the actual innovation. “We buy the equipment from the manufacturer — the buyer pays a 'usage fee', so to speak. Since it is possible for us to price the utilisation risk for similar types of machines based on the available data, we offer an assumption of the utilisation risk of up to 75 percent as an additional added value,” explain Bruckberger and Steffens. The financing tool ”Click & Finance” completes Linx4's service package and makes it a real point-of-sale financing. With this software, the fintech gives its cooperation partners the possibility to process financing requests in an uncomplicated way and to calculate financing options and conclude contracts at the point of sale.

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