Capital Expenditures: Ways to optimize
Long-term investments, or CapEx, are an essential part of entrepreneurial activity. However, the framework conditions for investment decisions have rarely been as challenging as they are today:
On one hand, companies are grappling with significant changes that lead to high investment expenditures. These include technological upheavals, managing the energy transition, shorter product life cycles, demographic change, and the reorganization of global networks. On the other hand, rising interest rates and weak economic prospects have massively increased the cost of refinancing, making it more difficult to access necessary capital for upcoming investments.
Against this backdrop, companies need to scrutinize where, how, and when it makes the most sense to invest. This is complicated by the fact that predictability for companies has decreased dramatically due to global crises and unclear political conditions. This poses an additional challenge for potential CapEx expenditures, because, unlike operational expenditure (OpEx), CapEx cannot “breathe” with the markets. Their potential for flexibility and the ability to adapt to short-term fluctuations is limited. CapEx ties up a lot of capital in the long term and can lead to immense burdens for the company if market forecasts do not materialize.
The question of how CapEx can be optimized is therefore becoming critically relevant. The good news is that companies have many options to significantly optimize the use of existing capital goods, reduce or avoid investment requirements and, in many cases, even free up the capital tied up in CapEx.
In this issue of our magazine, we present different perspectives on long-term investments and outline smart and efficient strategies for the sustainable optimization of CapEx.
