Financing smart manufacturing
For many companies, delaying change in adopting a smart factory model is no longer an option.
An increasing shortage of skilled staff, pressure on operating margins and the need to re-engineer business processes means that manufacturers should already be putting plans in place if they want to reap the rewards that smart manufacturing offers.
While developing a smart manufacturing strategy can certainly help businesses identify where new technologies and processes can yield commercial dividends, executing any strategy inevitably requires investment.
Show me the money!
Finding the money to fund new technology can be a sticking point for many manufacturers, but there are some attractive routes available to reduce both capex and opex costs arising from a smart manufacturing transition.
The good news is that in recognising the potential of the digital age for every business sector, many governments and authorities are offering incentives to drive innovation and promote the adoption of new smart technologies which can offset much of the cost. This offers manufacturers a welcome source of funding for those looking to build up their smart manufacturing inventory.
- Grants and regional schemes.
Assistance is available through Innovate UK Smart Grants, Knowledge Transfer Partnership, Innovation Loans and the Small Business Research Initiative. Further funding opportunities may also be available through local or regional funds, especially in areas classified as requiring special assistance or through regional assemblies in Scotland, Wales and Northern Ireland.
- Offsetting investments in R&D.
In the UK, tax credits are available to offset investment in R&D activities focused on unlocking innovation. The system works either through a direct tax rebate or a reduction in corporation tax. It can be backdated by up to two accounting years and applies to small and medium enterprises and larger businesses alike, including those that are currently loss-making.
Companies that spend on R&D to develop or enhance products, processes and services are eligible. SMEs can claim up to 33% of their investment and larger companies are able to claim a Research and Development Expenditure Credit (RDEC) which is currently worth up to 12% of qualifying R&D expenditure. R&D tax credits can therefore play an important role in releasing capital for further investment in research, business change, re-engineering business processes or hiring new staff.
£4.3 billion has been claimed by SMEs in R&D tax credits so far from the 42,075 claims made in the period covering 2017 and 2018.
To find out more on how you can benefit download the ‘Developing a smart strategy for getting ahead in manufacturing’ whitepaper or get in touch to discuss how we can help you in all aspects of business funding.Get in touch