Following the Chancellor of the Exchequer's 2002 Budget, an automation and drives supplier is promoting the financing schemes that are available through a sister fiancial operation.

Following the Chancellor of the Exchequer's 2002 Budget,Siemens Automation and Drives is promoting the financing schemesthat are available through its sister company Siemens FinanceOperation. For businesses seeking to install modernenergy-efficient equipment such as motors and variable speeddrives, the financial savings (through reduced energyconsumption) and enhanced capital allowances (ECAs) already makesuch investments attractive. Moreover, by using a finance scheme,the monthly payments are often be less than the value of theenergy savings, so financial benefits are enjoyed immediately.Many companies prefer to use a lease, lease-purchase or otherfinance scheme, rather than raising a separate bank loan oreating into a limited capital budget.

Arranging a finance schemethrough Siemens at the same time as specifying the equipment canallow the hardware to be in place - and savings to be made - farmore quickly than if a finance scheme were to be negotiatedseparately; it can also avoid having to pursue lengthy internalcorporate procedures to secure approval for capital expenditure.Once a Siemens finance agreement is in place, the interest rateis fixed and the customer is certain of what the monthly paymentswill be - which may not be the case with an advance from a bank.ECAs have been available for (almost) as long as the ClimateChange Levy (CCL) has been in place.

For a while there was someambiguity over whether ECAs were available to companies that hadnot made a direct purchase of an item (capital equipment had tobe owned by a company in order for the equipment value to bewritten-off against tax), but the Chancellor clarified thesituation in the 2002 Budget: it is now the case that'expenditure incurred on designated energy-saving equipmentfor leasing within the ECA scheme can qualify for 100 per centenhanced capital allowances.' This announcement is welcomedby many companies that could see the long-term benefits ofinstalling energy-efficient equipment, but, for one reason oranother, were unable to make the initial investment.

As well asmaking direct financial savings, companies that lease equipmentcan now enjoy the same tax-related cashflow benefit as thosebuying equipment outright.

Siemens finds that many customers areincredulous that monthly payments against a finance agreement canbe less than the value of the energy savings being made.

SteveBarker, Business Manager for Drives at Siemens Automation andDrives, states: 'As a rule-of-thumb, if an investment inenergy-efficient equipment will pay for itself through energysavings, we can probably arrange a two- or three-year financeagreement with monthly repayments that allow immediate savings tobe made.' Steve Barker adds: 'Once customers overcomethe initial feeling of it's-too-good-to-be-true, they becomevery interested indeed.

Although it is so far only a smallproportion of Siemens customers that use our finance schemes, thefeedback is so positive that I am sure the proportion will growsignificantly, especially in the area of energy-efficientelectric motors and variable speed drives.' Schemes can betailored to meet the needs of the customer, whether theinvestment is GBP 1000 or several million pounds.

Each contractis also drawn up to best suit the accounting and taxationrequirements of the customer.

Depending on the exact terms, therecould be further benefits beyond the term of the financeagreement.

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

Thislevel of flexibility is simply not available to a customer thathas purchased equipment outright.

If it often said that the onlypeople who can afford to save money are those who can afford tospend it.

But with flexible finance schemes available fromSiemens, virtually anybody can now upgrade to energy-efficientequipment and enjoy an immediate payback with the added cashflowbonus of the Government's ECAs.