The benefits of payback

The recovery of the higher value of assets that a company does not need is called payback. Idle assets are identified and then reused or disposed of as surplus, recovering considerable value in the process. In any organization, assets are always present. Machines or facilities are purchased, but over time they wear out to the point that they can no longer be used. This is where payback comes in. When doing this process, there are important principles to consider. These things are important for companies to know because they can be very helpful to the environment in terms of asset disposal.

The first essential is the principle of equipment reuse. Inactive equipment can be reused internally. Through an effective payback program, surplus equipment can be kept out of the landfill instead of buying new. Reusing any idle equipment reduces depreciation, insurance and capital costs. Instead of disposing of old equipment, a company can recycle it by converting oils and saving valuable chemicals; that can generate income and preserve resources. Hazardous waste and disposal costs can be reduced.

The second is reconditioning. An example of this is the reconditioning of toner print cartridges. They can be recharged and rebuilt and a company could save more money instead of buying a new one. In the payback program, pumps, motors, and valves can also be salvaged and put back into service by making some minor repairs. Reselling is also a good option for a company’s excess inventory. This reduces losses and increases the income of the company. In some idle assets, spent lubricating oils, metals and solvents can be recovered and this has a good effect on the environment because it reduces waste, improves operating costs and preserves natural resources. In some cases, replacement parts and unwanted materials can be returned to the manufacturer for cash. To increase the return on capital and reduce the tax base, it is better to eliminate excess assets.

Asset recovery can be very beneficial to the organization. The most important benefit is that an average of 80% of sales produced by payback are booked as profit. Companies have saved a significant amount of $150 million a year thanks to asset management. Obsolete materials, equipment, machinery, buildings and land fall under the category of assets. The payback program also plays an important role in boosting company morale. Employees and shareholders feel good about working with a company they know for its ingenuity rather than wasting assets that are still useful. It not only proves to be beneficial for the environment, but also contributes to the betterment of the company in general. The right people involved in the investment recovery program use specialized techniques to recover the highest value of an asset. They recover the scrap value, reuse it, recycle it or return it to the manufacturer.

So it seems that regardless of what is best for the business, a payback program can be beneficial in terms of financial gains and help run an efficient organization.