Don’t Forget the Grants

Published on Friday, 16 August 2013 11:46:36    Written by Marc
So you’re in charge of a capital planning involving a capital expenditure purchase. Your company or organization is anxious to get the capex approved as they anticipate it will be the source of great savings and more efficiency. You spend hours, days finding the right product with the right specs at the right price and with an acceptable delivery schedule. But wait, have you forgotten about possible government grants or credits?

grantsWhen preparing a capital expenditure (capex) purchase, most companies and organizations are often quick to get the capex request approved. . However, in the rush, unfortunately many companies forget valuable help that they can sometimes get in the form of a grant or credits. They come in many forms: from a utility company for a portion of the capex that deals with energy reduction, a credit for improvement or research and technology provided by a governmental organization, for training personnel on a new piece of equipment. All in all, when planned in advance the grants and credits can really add up. The idea is to have a culture of making it a habit to go after the grants and credits from the on start.

It is interesting to talk to people in business units and mention to them that for their new equipment capex they could receive a grant for the energy reduction that the new equipment will generate. People often only consider see the main benefits when analyzing a capex. If it is for a new piece of equipment, they will recognize the added sales they can bring in, or the reduction in staffing, or increased efficiency overall. But speak about energy reduction and often they did not think about it. Then go deeper and mention possible carbon credits and some start to scratch the back of their head. Moreover, what about credits for research and development?

  • Huh? Research and what? We are simply buying a few new machines to improve the output.
  • Yes, and did you need to do some research or were all machines already sold ready to work?
  • No, of course, we needed to figure out what we needed, we did some trial and error for months before we understood our problem and then find out what we needed, some of the equipment we are buying is not even really sold for that main purpose.
  • So, you are saying that you did some research, by trial and error into finding a new solution with new type of equipment?
  • Yeah, it’s about that.
  • So, you should inquire about potential tax credits related to research and development, it’s worth a try.

Some larger companies already have a dedicated department designated to go after such grants. In the better-organized companies, these people are part of the capex process from the get-go and often involved before a capex request is sent for approval. However, even if your company is not setup this way, it is still possible to at least validate each of the capex requests against the possibility of having some grants or credits. Of course, by the time the request hits the desk of the final approver, the people that made the request are eager to precede ready to roll so putting a capex or project on hold in order to inquire about the possibility of a grant or credit will make many people uneasy... The more upstream somebody looks into this, the better is it. Having a champion within the company, (even assigned part time) someone that will keep himself/herself up to date on the grants and credits available is great. Having this person involved early in the process is even better.