Renting equipment has become an attractive option for the Government since it provides outright benefit as opposed to purchasing of equipment. This is because it provides the widest variety of job versatility. By renting, all the advantages of investments are realized without a burden of ownership.
Renting does not only reduce costs, but it also allows people to take advantage of the expertise of staff who will:
- Assess and secure the right equipment for the job
- Offer a wide variety of specialized and modern equipment.
Some of the costs that are avoided by renting instead of purchasing include:
- Warranties
- Insurance cost
- Regular maintenance and repairs
- Storage cost
- Transportation cost
FACTORS TO CONSIDER IN DECIDING WHETHER TO OWN OR RENT EQUIPMENT.
- Burden of ownership.
What are burdens associated with ownership of equipment?
Ownership of equipment has several challenges as opposed to renting the same equipment as shown below:
- Ownership may require one to have a capital investment in order to cover the direct costs of the equipment.
- Ownership also has additional costs such as a maintenance shop, maintenance of staff, training of staff, fuel and other related expenses.
- In ownership, the burden of buying, maintaining and selling the equipment is all solely on the owner. In the case of renting, this burden is restricted to the renting center.
- Renting companies invest in maintenance staff in order to keep equipment in top condition. It may be hard for an individual to do that since they stand at a lower chance of winning the investment opportunity as opposed to a well-established rental company.
- In the market, national rental companies make the most significant annual investments in the newest and most advanced equipment in the market, which places renting in a higher position compared to owning of equipment.
Renting is flexible in the following ways:
- It enables one to take a wide take a variety of jobs and projects. This becomes very convenient because it may not be possible to have all the capital to purchase every piece of equipment that one requires.
- It enables one to use specialized equipment that could be otherwise obtained via renting.
- One is able to acquire equipment whenever they are needed.
- It saves time and money because equipment is easily available and accessible through renting.
- It enables one to invest in maintenance staff so as to keep all equipment in top condition.
- Access to expert knowledge and training.
Renting provides access to expert knowledge and training through the following ways:
- Through the experts in the rental companies, one is able to get the most up-to-date equipment.
- Through offering groups that have experience with specialized equipment applications such as aerial specialists, scaffolding services, pump and power.
WHAT ARE THE ADVANTAGES OF RENTING EQUIPMENT OVER PURCHASING?
- Regular maintenance and repairs- many pieces of heavy equipment require quite a bit of maintenance and upkeep to continue operating safely at their peak levels. They also require inspection and other routine testing.
- Storage- this is an aspect that many companies do not consider. The repercussions of this are that most of the equipment begins to suffer overtime because they are left outside. This is due to the exposure to elements such as water which may cause rust or even being stored in a poorly ventilated rooms or buildings. Another aspect to consider in storage is the cost. Storing large and heavy equipment in a warehouse is subject to premiums, which may eat into a company’s ability to store the much- needed products and materials. Renting the equipment itself in the first place removes this burden since the rental company will have to deal with the storage.
- Transportation- this cost arises if your location or work site is far away from your primary location, or the location where you are storing the equipment. Transporting this heavy machinery can be very expensive, time-consuming and logistically challenging. Therefore, renting here will offer more advantages since the equipment will be delivered to the worksite thus removing the burden of transportation.
- Time and labor- this is one of the hidden costs that are not considered often when dealing with equipment yet they make owning a piece of an equipment more expensive than it seems on the surface. Renting reduces time and labor costs. Additional labor may need to be hired for upkeep and management depending on the fleet size. Some companies will even have to set up entire divisions just to handle the logistics and upkeep of their equipment fleets.
- Operational advantages- these operational advantages arise from renting equipment in that it enables the business to run more smoothly and compete more effectively in ways that would not be realistic with equipment ownership. It allows a company not only to survive and thrive in a competitive environment.
- It allows one to rent before owning- this is advantageous since it allows you and your employees to get familiar with the equipment even before purchasing it. One is also able to try different brands and models of that equipment and eventually allows your ultimate purchase to be more informed.
- Tax deductions-rental expenses are usually fully deductible to a company as a business expense. Buying a piece of equipment is considered a capital expense and the full expense cannot be deducted in the year it was purchased. Capital expenses will instead be depreciated over the life of the equipment.
- There is no risk of obsolescence- technology keeps on advancing, which places a risk of pieces of heavy equipment becoming obsolete as it is replaced with a new iteration. This may also render equipment illegal or highly undesirable for use. This is not a concern for companies who rent their equipment since it would be the rental company who that assumes the risk of the asset completely or drastically losing value and application.
Written by Lindsey Rentals. Lindsey Rentals offers the best service and equipment rental Columbia, MO has to offer!