Most companies must occasionally make investments by acquiring machinery, equipment or premises, for example. Investments may also be immaterial, such as research and product development investments. As an alternative to investment, it is advisable to look into the possibility of leasing machines, etc. so that your company’s capital is not tied up in ownership.
In the assessment of the risks related to investment, you can use sensitivity analysis, for example, to explore how the profitability of an investment changes if key factors change. It is also advisable to use calculations to aid decision-making. They enable you to see the big picture related to the investment.
The investment project and its expenses should be carefully monitored in order to keep to the budget and schedules set for the project. The investment project is followed up 1–2 years after its implementation. The follow-up calculations enable you to assess whether the investment succeeded as planned. The main objective is to learn for the next investment project.
An investment plan reveals any changes in the company’s operations, production, profitability and balance status brought on by an investment. You can use the My Enterprise Finland calculations to help in financing planning.
Your company must have sufficient cash flow financing to be able to invest. Substantial self-financing by the owners facilitates the implementation of the investment project and the procurement of external financing.
Your calculations must take into account that investments also cause a constant need for additional working capital.
It may be possible to obtain a subsidy for investment from the Centre for Economic Development, Transport and the Environment, for example. You should also look into the availability of Finnvera loans and guarantees.
Investments are often defined as fixed asset acquisition costs in accounting. It is advisable to activate acquisition costs together with an accountant or accounting firm.