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R&D: the tax credit option

17 September 2020

Greater adoption of technology is the key to overcoming challenges facing the industry, says Rob Lowe. Yet many firms are missing out on valuable funding that could support it, he adds.

The use of technology and software within logistics isn’t new. We’ve seen it consistently improve customer experience, operations and internal processes for years. 

Having said this, the sector still suffers from a lack of innovation in technology compared to others. It can be a huge investment for organisations which often operate on comparatively low margins. Furthermore, there is often resistance among a traditional workforce, which tends to be lower skilled and often highly dispersed. 

Another challenge is the common belief that cutting-edge technology is exclusive to larger businesses, as they usually have bigger budgets, their own proprietary platforms or software, and adaptability is often embedded into the company’s culture. However, this simply isn’t true. 

The real challenge – especially among smaller firms – is understanding how to gain greater investment and accelerate the pace of change at a difficult time. The sector’s businesses don’t have much longer to ready themselves for some of the greatest challenges in a generation and need all the help they can get.   

R&D tax credits

This is where research and development (R&D) tax credits come in. These often misunderstood tax credits reward innovation and fuel growth. The criteria for claiming is purposefully broad. And whether companies are creating new products, processes and services or adapting existing ones, the rebates are a valuable source of cash for them to reinvest towards accelerating their R&D, hiring new staff and ultimately growing despite the challenges ahead.

As a sector with many moving parts, logistics has naturally high levels of innovation and R&D. There are countless businesses investing time and money into implementing new systems, improving existing ones, and developing a joined-up solution. Yet they often remain out of the loop and unaware that a good deal of their investment can be recouped. 

If awareness of the incentive was greater, we’d undoubtedly see a lot more logistics, warehousing and e-commerce operations furthering their R&D activities, allowing them to get the technology they need to meet the demands of the future. 

What is R&D in logistics?

We’ve helped many successful clients gain access to R&D incentives. This includes a cold-chain logistics business which developed a first-of-its-kind software platform to track the movements of perishable items against flight times. Another example is a production-line specialist that worked with a print magazine distributor to automate several heavy-lifting and loading processes. We’ve also supported a precision engineering firm, which created an industrial sorting machine for small products within a weight range of just 0-8 grams.

The key to a successful claim is to approach it in a measured way and understand the boundaries of what to include so as to maximise the return without overstepping the line. It requires a rigorous process.

Rob Lowe, senior digital technology specialist, ForrestBrown

For more information, visit www.forrestbrown.co.uk

 
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