Production services are Concept, definition, types and classification, conditions of order, fulfillment, calculation of prices, taxes and profits

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

The main difference between works and services is that as a result of works the subject receives a material object. Services are intangible. They are supported exclusively by documents. Services can be very different, and in this article you will learn about the types of production services.

General information

Production services are a set of activities aimed at meeting the needs of organizations. All of them are provided on a contractual basis. In simple terms, the provision of production services is the execution of transactions, the nature and type of which depends on the specific needs of the enterprise.

Engineering

It is a set of commercial measures for the preparation and support of the production process. Services of engineering companies are very diverse. Firms offer to ensure the release of goods necessary for the population. They can also sell goods andservices, production equipment, preparation for construction and operation of infrastructure, industrial, agricultural and other facilities.

The whole range of engineering services provided in the domestic and foreign markets can be divided into two groups. The first includes activities for the preparation of production activities. The services of engineering companies are related to pre-project, design work, solving problems during the creation of an object (conducting economic studies, legal and other procedures).

The second group consists of services aimed at ensuring the process of production and sale of products. Among them:

Optimization of the money management system.
Coordination of the enterprise.
Optimize the sale of goods.
Inspection and testing of equipment.
Selection, training of specialists, staff development.
Help with assessing income and expenses.
Development of recommendations on marketing research, financial policy.
Introduction of information support systems, computer technology.

Engineering manufacturing services are complex activities that require specific knowledge. Therefore, they are provided only by specialized companies, industrial and construction companies that supply equipment and carry out installation work.

Rental relations

Not every company has enough funds to purchasethe necessary equipment. Expensive machines, machines can be rented. In the manufacturing services market, this type of activity is in high demand.

An enterprise can obtain the necessary equipment by concluding an agreement with the owner. It fixes the operating conditions, the amount of payment, the term and other essential conditions. Depending on the period for which the agreement is concluded, the lease can be long-term (more than five years), medium-term (from a year to 5 years), short-term (from a few hours to 1 year).

Rental relations also differ in subject and conditions.

Leasing

It is a type of long-term lease. Leasing is very popular in the international market. Today, this type of lease is seen as a specific form of financing.

The essence of leasing is the provision of long-term lease of construction equipment, production equipment, other tools and materials. It can be of two types: financial and production.

Under the first type, the leasing company (lessor), on behalf of an economic entity wishing to obtain the rights to operate any property, acquires the relevant facilities from the manufacturer at its own expense. After that, the company leases them, as a rule, with subsequent redemption. Thus, there are two transactions: a sale and a long-term lease.

Terms of use

The duration of the lease in leasing is usually determined taking into account the depreciation period of the property. dependingdepending on the type and purpose of objects, it can range from 5 to 20 or more years.

Depreciation rules are taken into account when forming the rent for equipment. Payments cover most or all of its cost.

Production services of a leasing company can be paid at the same time as rent. The amount will include the company's costs for the purchase of equipment and the amount of remuneration prescribed in the contract with the tenant.

Fate of property

The landlord (leasing company) and the user (tenant) can agree on subsequent actions with the object. So, after the expiration of the contract, the tenant can:

sign a new lease agreement;
return the subject of the transaction to the leasing company;
purchase property at residual value;
with the consent of the leasing company, sell the object (at the residual value) and pay it off.

Operational (production) leasing

In this case, an agreement is concluded for a period less than the depreciation period of the object. After this time, the tenant can return the property to the leasing company or enter into a new agreement.

With operational leasing, as a rule, the rates are higher than with financial ones. This is due to the fact that the lessor does not fully recoup its costs and is forced to take into account possible commercial risks, respectively, it raises prices for its production and technical services.

Internationalleasing

It can be imported and exported. In the latter case, the company acquires property from a domestic manufacturer and leases it to a foreign counterparty. When buying an object from a foreign enterprise and providing it to a domestic counterparty, they talk about import leasing.

Speaking of the international long-term lease of production facilities, it is necessary to mention one nuance. In accordance with the requirements of the IMF, the obligations that arise from such leasing are not included in the volume of the state's external debt. In this regard, international leasing is supported by many countries.

Row

This form of production services involves technical and economic cooperation, within the framework of which the creation of an object by order of the enterprise is carried out.

The contractor is the contractor. He concludes a contract with the customer. The Contractor is fully responsible for the quality of the object, compliance with the deadlines and scope of work, the provision of other services stipulated by the contract.

Contracting is quite widespread in international practice. During the creation of the object, the ownership of all material and technical resources is with the foreign contractor. He controls the whole process. The customer, in turn, provides all the initial data, allocates a construction site, provides the laying of engineering and technical communications, and pays the bills.

The subject of the contract may be installation, exploration, design,survey and other works, as well as reconstruction and re-equipment of facilities. Very often, the services of contractors are used in R&D, as well as in the field of engineering and consulting activities.

General Contractor

He is an organization that bears full responsibility for the fulfillment of the conditions enshrined in the contract. The general contractor has the right to involve other entities in the process of creating an object. Depending on the nature of the functions entrusted to them, they may be referred to as sub-suppliers or sub-contractors.

Franchising

This is a relatively new kind of manufacturing service. In enterprises operating in the franchising system, the rules developed by the main office (parent company) apply. Such a firm enters into agreements with small organizations (subsidiaries), individuals. In accordance with such agreements, subsidiaries acquire the right to act on behalf of the franchisor (head office). At the same time, they are required to work in the form established by the parent company, for a specified period and in a specific territory.

The franchisor undertakes, in turn, to provide enterprises with technologies, equipment, and to assist in business development. The most popular franchise companies include McDonald's, a network of Volvo service centers, etc.

Knowledge Products

As a rule, various kinds of know-how, patents, technology transfer licenses are used withindomestic markets. If some results of intellectual activity enter the foreign market, they become objects of world trade, subjects of foreign trade transactions.

Each product of intellectual work has its own specific features. Thus, know-how is characterized by the confidentiality of production, scientific, technical, organizational, commercial and other transmitted information. Know-how is not subject to patents. Methods of payment for its provision may be different. The main ones are:

Roy alties. These are gradual payments, the amount of which is proportional to certain indicators received during use. Roy alty is calculated taking into account the economic effect that the acquirer receives: an increase in the volume of output of goods, an increase in profits, etc. Payments are made at the end of each year of the agreement from the moment the finished goods are released. If the contract is concluded for a long period, the rates differentiated by years are applied.
Lump payment. This is a one-time payment, the amount of which is agreed in advance. Payment is applied if it is difficult to predict the result of using know-how or if the cost of a license is low.

Financial and credit sphere

Lending to enterprises is a kind of production services. The concentration of capital occurs in large financial centers. If we talk about international trade, then a large amount of assets is concentrated in Western European countries (about 1/3), Japan (about 1/4) and the United States (1/5).

In terms of assets, the largest banking centers in Western Europe are located in Paris, Frankfurt, London, Lisbon, Stockholm, Berlin. The leader in this list is London. The assets of its financial centers are characterized by the highest profitability.

Corporate lending is widely developed within countries as well. In Russia, for example, there are several large banking centers that provide financial and production services to companies.