If heavy machinery is an important part of your business, you are faced with the choice of either buying, entering into a long-term rental agreement, or plant hire. Each of these three methods has its own benefits and drawbacks. The objective of this blog is to look at the advantages of plant hire.
1) No Upfront Cost
Buying machinery is going to commit capital that you now no longer have to fund your ongoing business. Hiring plant does not involve an upfront cost and therefore does not adversely affect your cash flow. Instead, you need to pay the rate charged by the plant hire company. When sourcing equipment, price should not be the only determinate. You need to make sure that you hire from reputable companies that provide reliable machinery and operators, and high-quality after-sales service.
2) No Depreciation
Like cars, machines depreciate although they do generally hold their value far better than automobiles. If you own machinery, and as time marches forward, you do need to be thinking of an exit strategy. You will be faced with the decision to either sell them or salvage them. This exposes you to uncertainty and you will need to commit time to the process. Buying a machine is a commitment and you need to make sure that it delivers an attractive return on the investment made. Plant hire removes these variables from the equation and affords you a high degree of flexibility and a low degree of time and financial commitment.
3) New Models and Features
Technology advancements are everywhere and heavy machinery is not immune to these developments. If it is important for you to have the latest features so as to maximize your work efficiency and safety, plant hire is a compelling business solution for you. If you are running your own fleet, the continuous process of upgrading is expensive and time-consuming.
4) Lower Storage Costs
Regardless of whether you own or rent your business premises, there is a cost to real estate. When you are storing idle machinery, there is a downtime cost and there is a storage cost. This variable is removed when you enter into a plant hire agreement and helps you in running a leaner operation.
5) No Maintenance Costs
The maintenance of heavy equipment can be exceptionally costly. Your operators may not be blessed with the interest, incentive, or desire to look after your machine and this can result in prohibitive maintenance costs. If you rent a machine, it will be the owner’s responsibility to do the maintenance.
6) No Transport Costs
Construction companies are almost always operating on more than one site. This means that resources needed to be transported between sites which brings with it a world of complications and costs. Not only do you need to find and pay a third party, but you also need to prepare the machine for the trip which is time-consuming. There is the added risk that your machine may be damaged en route. There is no need to transport the machines if you rent them. After you return the equipment that you used, you can then hire new ones in the new location where you will be working next.
7) Tax Benefits
The full rental is 100% tax-deductible from your taxable income. If you buy a machine through a hire purchase agreement, only the interest portion of the monthly payment is deductible.
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