Plant & Works Engineering
Better off the Balance Sheet – the Benefits of Hiring Equipment
Published:  08 September, 2016

For many businesses that require temperature control solutions in their day-to-day operations, equipment is often purchased and then run until the point of failure. Equipment hire offers a practical alternative says Russ Baker, UK sales director of the hire division at temperature control specialist ICS Cool Energy, who discusses the four key benefits of hire vs purchase.

There are no hard and fast rules when it comes to the hire and purchase debate, and equally there is no right or wrong answer – it comes down to personal choice. Take the car industry as the perfect example of how this might work in practice. For many years, the vast majority of people have used finance to purchase a car, but now large swathes of the population hire a vehicle for a monthly sum. For many, the benefit is having a trouble-free experience, thanks to regular maintenance and the exchange of the vehicle after a three year period. Temperature control solutions can be done in exactly the same way, but is it right for you and your business?

Top four considerations:

Terms of use - One of the first considerations is the period of time that the company requires the equipment. If it is required for a short period of time, perhaps as a backup system during maintenance works, or during the months where existing cooling or heating systems may not be working effectively, equipment hire is the ideal solution.

Funding - Although terms of use may be one of the first and most important factors, how to fund equipment purchases must be a close second. With hire, there’s no upfront cost to pay. Payments can be charged on a monthly basis, which helps with cash flow, and businesses also have the opportunity to negotiate the terms of the hire – either to meet an urgent need or on a full-time basis.

The balance sheet - Even the phrase ‘balance sheet’ can send shivers down many engineers’ spines, but the concept of keeping purchases off the balance sheet, and therefore maintaining liquidity in a business, is an important consideration when hiring equipment.

In fact, one of the key benefits of hiring equipment is that the asset does not officially belong to the company, and you can therefore keep it off the balance sheet. The hire costs will of course feature on the profit and loss account, and while monthly rentals are subject to VAT, 100 per cent can be reclaimed.

Maintenance and whole life costs – During the specification stage of any equipment the upfront cost is a top consideration. However, taking into account the overall costs of equipment from cradle to grave is paramount. When you consider chiller efficiency improvements over the last decade alone, plus the time and cost involved in regular maintenance – whole life costs can be sizeable.

Where hire contracts can help, is that they are often inclusive of maintenance. ICS Cool Energy for example, provides 24/7 maintenance as part of all its hire packages and units are replaced with new ones, every two years – ensuring productivity and efficiencies are maintained.

Where there is a need for temperature control solutions, hire equipment should be considered as a viable alternative to purchase. While the decision ultimately comes down to the procurement and management teams, the benefits are numerous ensuring businesses have fully operational kit that is installed, maintained and fully serviced by a team of professionals – all for a single monthly cost. It certainly can pay off to take a look at the alternatives.

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