[Supervised by a former successor of a machining company and tax accountant] Guide to Reviewing Borrowing in the Manufacturing Industry
Although there are profits, there is no cash left after monthly repayments. The cause lies not in performance, but in the borrowing method. I will summarize the review in 8 pages and present it to you.
"I want to add one more machining center. We're making a profit. Yet, the bank's response is slow..." In such cases, the cause may not be performance, but rather the current structure of borrowing. Companies with heavy monthly repayments tend to share three common factors: (1) They are borrowing working capital through long-term loans, (2) They have multiple loans with varying repayment schedules, (3) Their repayments exceed their profits. None of these three issues stem from the president's lack of effort; they are problems with the borrowing method. The borrowing method can be reviewed. This document provides a measure to assess the burden of repayments (the ratio of repayment resources to annual repayment amounts) and guidelines for evaluation, followed by an explanation of four strategies in the recommended order: (1) Reallocation of fund usage (the only method that does not damage credit), (2) Consolidation of loans, (3) Extension of repayment periods, (4) Rescheduling. If you skip the order, you will only realize it after your evaluation within the bank declines. An example calculation is included, showing a company with a total borrowing of 80 million yen reducing its annual principal repayment by half without decreasing its balance by even one yen. This is an 8-page document aimed at manufacturing business owners. It is available as a gift from the catalog below.
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Loan Review Guide
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In manufacturing equipment investment, decisions may be made based solely on manufacturers' estimates and the possibility of subsidies. However, when introducing high-cost equipment, it is necessary to confirm the "total investment amount," which includes not only the main price but also transportation, installation, construction, tools, jigs, and maintenance costs. Additionally, one must consider the funds until the subsidy is received, cash reserves after the investment, monthly repayment amounts, investment recovery periods, order forecasts, production plans, and gross profit estimates, as neglecting these can strain cash flow after implementation. Our company organizes the figures that should be confirmed before equipment investment based on experience in manufacturing and financial analysis. Before ordering high-cost equipment such as machining centers, CNC lathes, 5-axis machining machines, and 3D measuring instruments, we provide materials for the manufacturing industry that highlight often-overlooked aspects such as cash flow, repayment sources, and investment recovery. Equipment investment is not merely a machine purchase; it is a management decision that changes the way a company competes. We will provide insights to confirm subsidies, loans, self-funding, repayment plans, and order forecasts before placing an equipment order. Supervised by Toshirou Ooyama, a former successor of a machining company and tax accountant.
