Simon Zeilberger CFO of ENGEL decides against Pay-per-Use collaboration with banks.
Machine manufacturer Engel offers Pay-per-Use. CFO and Managing Director Zeilberger says in an interview with DerTreasurer: "Pay-per-Use is an interesting financing model. Our customers have demanded this utilization-oriented form of financing more and more, especially since the energy crisis."
Engel has been thinking about Pay-per-Use since 2020, and in cooperation with Linxfour, the model launched at the end of 2022. Linxfour is the enabler, so to speak, buying the machines from Engel, leasing them to Engel's customers and financing the purchase through the own machine finance funds. In this model, Linxfour assumes the economic risk of underutilization and the risk of a loan default.
CFO Zeilberger also considered the offerings of banks like Deutsche Bank and Commerzbank but found that they didn't adequately map the economic risk, and as a result, the balance sheet advantage for the customer wouldn’t come into effect.
The Pay-per-Use model of Linxfour works on a fixed price per unit produced or per machine runtime, with the rate determined by the residual value of the machine and the term of the contract. The IoT interface, using the online support and remote maintenance tool "E-connect.24," transmits machine usage data to Linxfour in a data-encrypted form. The built-in remote maintenance tool is regularly serviced by Engel service technicians to plan maintenance work and keep plant downtimes short.
At the end of the agreed contract period, the customer has the option of buying the machine, or Engel-Used-Machinery, the used machinery company within the Engel Group, will buy the machine back from Linxfour. This also greatly benefits the sustainability of industrial equipment overall because a machine financed through Linxfour will at least have one second lifetime.
The PPU model has clear advantages for Engel customers, including no large investments required, liquidity preservation, and better balance sheet presentation. Engel has already had its first customers use the new model since the start of the cooperation, with larger customers showing more interest in the alternative financing model currently. Engel now plans to roll out PPU internationally with Linxfour, beginning with Europe and eventually expanding to North America and China.
In summary, the Linxfour Pay-per-Use model offers a flexible and cost-effective financing option for customers of Engel, with Linxfour assuming the economic risk and the benefit of better balance sheet presentation for customers. This model benefits companies most operating in seasonal industries or those who need to conserve their liquidity. Engel is planning to roll out the model internationally with Linxfour, aiming to promote a sustainable circular economy in the process.
(Original text from DerTreasurer, translated into English by Linxfour)