To a large extent, companies finance their investments with their own resources. This is a result of the Barometer Cost Management, a survey of 251 companies, mainly SMEs, conducted by the EBS University of Business and Law and Expense Reduction Analysts. Therefore a third of financing needs come from profit and depreciation. 22% of financing needs come from funds generated through cost savings programmes. Only 12% of funding requirements are covered by bank loans.
According to Fred Marfleet, CEO and founder of the cost management consultancy Expense Reduction Analysts, the low proportion of investments financed by bank loans is mainly due to the banks’ restrictive practices set after the financial crisis as well as the ECB stress tests. “Companies focus on replacement and diversification investments. This is a sign showing us that companies are waiting to see how the economy and crises, especially in the Ukraine, will evolve” says Marfleet.
With over a fifth of financing needs covered with funds generated through cost reduction programmes, according to Marfleet, the importance of cost management for the growth and sustainability of companies is clearly shown. It is therefore not surprising that cost management is a top management task. In 42% of companies, this is a responsibility for the CEO, in 28%, for the CFO. "The fact that in 70% of the companies, the top management has the responsibility for cost management is a good sign. Cost management is a strategic and sustainable responsibility which must be in the focus of the top management.