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The Benefits of Renting Industrial Equipment vs Buying

Aug. 8, 2019

A frequent debate in the construction industry is whether to buy or rent industrial equipment.

There is no single one-size-fits-all answer.  There are pros and cons of each option, and you will need to weigh these within the context of your own situation at any one particular point in time.

Depending on your requirements, there are situations where purchasing equipment is the right choice. However, renting equipment is also an increasingly popular option and can be the absolute right decision in certain cases for a number of valid reasons.  Read on to learn more about the benefits of renting versus the benefits of buying industrial equipment.

Industrial Equipment Rentals

The first step in deciding whether to rent or purchase a piece of industrial equipment is to analyse your situation both from an application / use of the equipment perspective, but also from your company’s business strategy and cash-flow perspective.

As a general rule, if you don’t plan to use a piece of equipment in your fleet for over 65 percent of the time you should strongly consider renting it instead of buying it.   Why should you bear the cost of it just sitting in your yard, with such a low utilization?   On the flip-side, you also need to consider whether your business would be impacted negatively if you didn’t have that specific piece of equipment immediately available when needed, even if it experienced low utilization.  Regardless, save yourself time by creating a list of your favourite go-to resources for equipment rentals so you can react quickly if equipment is needed right away.

Advantages of Renting Industrial Equipment

Renting is about creating flexibility.  Renting is a growing trend in the industrial equipment industry for many valid reasons. Managed properly, Renting allows companies to allocate their resources most-effectively.

Cash (more specifically “cash-flow”) is King.  Industrial equipment rentals help to maintain that positive cash flow you are seeking.  Buying an expensive piece of equipment and paying for it upfront, or even financing it with the associated interest costs, can materially affect your cash flow.   Anytime you can flex your costs and match them against your specific period or specific project, this is desirable.  Turning capital expenses into operating expenses ensures resources are not tied up in equipment you may not be utilizing fully. All businesses have ongoing costs, but anytime you can convert a fixed cost into a variable cost so that the costs flex with your projected revenue, it’s a good thing.

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