What is Investment Cost? How to Manage Investment Costs Effectively

Investment cost is a core element in business development strategies, helping to create long-term value through asset acquisition and infrastructure construction. From investing in equipment to market research, investment costs drive growth and profitability. Naltako, a leading provider of lifting equipment, offers solutions such as low-profile hand pallet trucks and hydraulic lift tables to optimize costs. This article will explain the concepts, types, and how to manage investment costs effectively.

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What is Investment Cost in Business?

Investment cost is the accumulated or mobilized assets intended for business development and profitability, including the purchase of fixed assets, market research, and infrastructure construction. In business, investment costs help companies expand scale, enhance production capacity, and compete in the market. For example, investing in scissor lifts or freight elevators increases warehouse efficiency, creating a long-term advantage. According to the World Bank, infrastructure investment drives economic growth by an average of 1.5% annually.

Investment cost is an accumulated or mobilized asset aimed at business development or profitability

The role of investment cost lies in its ability to create a foundation for sustainable development. A manufacturing business can invest in forklift ramps to optimize goods transportation, thereby reducing operational costs.

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Common Types of Investment Costs

Investment costs are divided into two main categories: capital expenditure (CAPEX) and operating expenditure (OPEX). CAPEX includes long-term investments such as purchasing hydraulic lift tables, building workshops, or installing production lines. According to CBRE Vietnam, CAPEX accounts for 60-70% of total investment costs in the manufacturing industry, helping to create high-value fixed assets. Conversely, OPEX refers to daily expenses such as equipment maintenance, utilities, or employee salaries.

Each type of cost has its own application. For example, a logistics company invests CAPEX in hydraulic hand pallet trucks to increase productivity, while OPEX is used for periodic maintenance.

Capital Expenditure vs. Operating Expenditure?

Capital expenditure (CAPEX) and operating expenditure (OPEX) differ in purpose and duration. CAPEX is a long-term investment, such as buying hydraulic lift tables or building warehouses, aimed at creating fixed assets and sustainable value. In contrast, OPEX consists of short-term expenses, such as freight elevator maintenance or fuel costs, accounting for 20-30% of the annual budget for small businesses (according to Deloitte).

For example, a business invests CAPEX in forklift ramps to increase transport efficiency, while OPEX is used for lubrication and periodic equipment inspections. CAPEX usually requires a large initial capital but brings long-term benefits, while OPEX requires continuous management to avoid waste.

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Managing Investment Costs Effectively

Effective investment cost management requires careful planning, technology utilization, and capital optimization. Businesses need to:

Investment planning: Predict the need for purchasing scissor lifts or building workshops based on market research.
Use of technology: Financial management software helps track CAPEX and OPEX, reducing cost waste by 15% (according to Gartner).
Financial risk management: Evaluate profitability before investing in tilting lift tables.

For instance, a logistics company uses software to analyze the cost of purchasing hydraulic hand pallet trucks, thereby optimizing the budget.

The Impact of Investment Cost on Finances

Investment costs significantly impact corporate finances in both the short and long term. In the short term, large CAPEX investments, such as purchasing freight elevators, can reduce cash flow and cause financial pressure. However, if invested correctly, such as in hydraulic hand pallet trucks, businesses can increase productivity and long-term profitability. According to PwC, poor investment decisions result in a loss of 10-20% of annual profits.

Financial risk management is the key factor to minimize negative impacts. For example, investing in mini cranes from Naltako helps increase warehouse efficiency, bringing sustainable profits. Naltako provides lifting equipment designed to optimize costs and reduce investment risks.

Contact Naltako via info@naltako.vn to receive tilting lift table solutions that reduce investment risks!