Profit Blog

Jarmo Manninen & Muutosdraiveri Oy


From company profitability to revenue financing for company investments

11. huhtikuuta 2025

A company's revenue financing refers to a company's own internal financing, i.e. the funds it receives from its business operations without external financing, such as loans or investments. Revenue financing usually arises from the company's profit, i.e. when the company's income exceeds its expenses. These funds can be used, for example, for investments, paying off debts or growing the company. It is an important part of a company's financial independence and sustainable operations.

When the prerequisites for a company's financial management have been implemented in the right way for each company, the company has the prerequisites to achieve its profit goals with the right kind of management. This opens up opportunities for the company to use the company's profit, i.e. revenue financing, for investments.

When should a company use the company's revenue financing for company investments?

Using the company's revenue financing for investments makes sense especially when the following conditions are met:

1. Sufficient cash flow: The company has a stable and sufficient cash flow that covers daily business expenses and leaves excess funds for investments.

2. Avoiding debt: The company wants to avoid taking on debt, for example due to high interest rates or an uncertain economic situation. Using revenue financing saves on interest on loans and repayment pressure.

3. Reasonable investment costs: The planned investment is relatively small or medium-sized, and it does not endanger the company's short-term financial stability, even if it is covered with its own money.

4. Long-term return expectation: The investment is expected to have a long-term benefit for the company, which justifies the use of its own funds without an immediate return requirement.

5. Utilizing existing assets: The company wants to use the capital it has already accumulated efficiently, instead of having it remain unused or in low-yield assets.

In addition, it is important to assess the profitability of the investment and its impact on the company's financial situation. Using revenue financing can prove to be particularly sensible, for example, when it concerns an investment that improves the company's competitiveness or efficiency.

By using the company's own funds for investments, the company avoids interest on debt and potential risks related to loan terms. This can increase financial stability, as the company does not have to worry about repaying the loan.

In addition, it is important to assess the profitability of the investment and its impact on the company's financial situation. The use of revenue financing can prove to be particularly sensible, for example, when it comes to an investment that improves the company's competitiveness or efficiency.

I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them.

I hope that you were interested in this matter and that you can continue to be involved.

I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at:










 

Share this article

Recent posts

24. kesäkuuta 2025
When a company first encounters a situation where the company's cumulative profitability targets are not being met, the company should use its own resources to create a concrete action plan of corrective measures and implement it in such a way that the company will achieve the company's cumulative profitability targets within the specified timeframe. If the company is unable to achieve the company's cumulative profitability targets within the specified timeframe, the company should seek the right kind of external expertise with the right kind of agreement to remedy the situation.
17. kesäkuuta 2025
In my opinion, the basis of a company's business should be that everyone in the company must do their job and fulfill their responsibilities in the company so that the company's goals are always achieved. If a person's best effort is not enough, then they must be able to do better, either on their own or with the advice of someone else. If a person's own abilities are not enough to achieve their goals, then everyone is obliged to ask for help from their superior. In turn, the superior must always be obliged to either help in the situation in question, either by helping themselves or by arranging help. It is not enough that everyone has the right to ask for help from their superior in a situation where doing their best is not enough, but everyone also has the obligation to use this right without unnecessary delay. In this case too, wasting time will not fix the problem; rather, wasting time unnecessarily multiplies the problem. In well-functioning companies, a person can always ask for help from their colleagues if necessary. The idea behind helping someone is not that the helper's job is to do the work for the person being helped. The idea is that with the help of the helper, the person being helped learns from the help they receive so that they can achieve their goals after this situation without the helper. By doing this, the latent abilities and creative ability of people to find new solutions are put to use, which has proven to be a very significant potential in my experience. In order to achieve this in a company, the company's work culture must be able to be developed to be positive and encouraging, and such that problem situations are not hidden in the company, but rather they dare to bring them up as soon as they arise.
10. kesäkuuta 2025
A company's work culture tells you how the company operates. In other words, a company's work culture tells you about the ways of operating in the company. A good work culture promotes the commitment, motivation, productivity, job satisfaction and well-being of the company's people, while a bad work culture typically leads to dissatisfaction, high turnover and poor performance. I have visited hundreds of companies. When you walk through the door of a company and observe the activities in the company for a moment, this already gives you the first impression of what kind of work culture the company has.