Excavators have enabled construction professionals to complete tasks that would have taken days or weeks manually. If you need an excavator for a variety of projects, you have the option of purchasing one or renting one. When deciding whether to rent or buy an excavator, there are numerous factors to consider. It would help to not base your decision solely on financial considerations. Fortunately for you, we've compiled a quick guide to determining whether renting or owning is the best option for your company.
We must understand that there is a business rule to follow when deciding whether to rent or buy heavy equipment. If the equipment must be used for over 12 months, purchasing the equipment is the better option. The opposite is true; if the equipment will be used for less than a year, renting it is more cost-effective. The following section explains the numerous advantages of renting heavy equipment rather than purchasing it.
Having Access to the Most Recent Technological Advancements
For medium-sized or smaller construction companies, having access to and using the latest excavator technology and other heavy equipment can be extremely valuable. There are numerous advantages to using the most recent equipment, including increased operational efficiency and decreased project completion time; both can result in higher profits per project.
Almost every company that rents heavy equipment has the most up-to-date technology. Another advantage is that the heavy-equipment rental company handles the equipment's maintenance and upkeep. This relieves the company of the burden of renting the equipment, which reduces cost and time and allows the company to focus their investment on other aspects of the projects they are working on. Renting standard excavators, long-reach excavators, and other heavy equipment instead of purchasing them allows companies to book more projects and take on larger projects than their working capital and budgets allow.
Another advantage of renting is the ability to test the equipment to ensure that it is something the company would like to purchase. This helps to ensure that the company does not invest in equipment that does not meet its standards and that the equipment includes the most desired or required product options.
Scheduling and Securing Additional Projects
A lot can happen when scheduling projects that can interfere with either the start of the project, the progress made throughout the project, or the completion of the project so the organization can move on to new projects. When a company switches from one project to another, there may be a delay if the company's access to excavators and other types of equipment is limited. They must wait for one project to be completed before transferring equipment and workers to the new project.
Multiple excavations and other heavy equipment can be rented simultaneously, reducing transition time from one project to the next, or various projects can be worked on concurrently. A company could go as far as doubling or tripling the number of jobs it performs in a given period, significantly increasing revenue and profits.
The advantage in the marketplace
Renting an excavator instead of purchasing long-reach excavators and other heavy equipment increases flexibility. It increases the likelihood of completing projects on time if mechanical issues with the equipment arise. Another advantage is securing and launching new projects before the competition. This is especially true if the contracting company for which your company is working has other upcoming projects or multiple projects running concurrently, all of which are easier to secure because you already have one foot in the door.
Taxes and Depreciation of Equipment
Renting heavy equipment is more flexible than purchasing it. Renting equipment is a tax deduction, whereas purchasing equipment is taxed at a depreciated rate - sometimes over the machine's life and sometimes only in the first year it was purchased. Renting equipment is always a tax deduction, and it does not have to coincide with a specific tax year or depreciation schedule, making it even more beneficial and straightforward.
Maintenance costs can be prohibitively expensive when a company purchases all or a portion of its equipment. Furthermore, if a company has difficulty scheduling maintenance on their equipment because it is constantly being used on projects and jobs, it can cause the required maintenance to be delayed. Prolonging required maintenance can increase maintenance costs because mechanical issues can worsen due to failing to follow an adequate maintenance schedule. In a difficult situation, a company may choose between "fixing the equipment now" and "continuing to use the equipment and extending the maintenance required."
Maintenance costs and the difficulties associated with postponing projects due to the need to repair equipment are eliminated when renting heavy equipment. This is especially useful when a company has discovered and secured new projects and opportunities for which they were unprepared.
There is no need for capital expenditure.
Purchasing standard excavators, long-reach excavators, and other heavy equipment is costly, especially for medium- to small-sized businesses. When a company makes such a large purchase, it is usually necessary to budget for it. Additionally, purchasing heavy equipment can limit the money for other projects or strategic investments. Because all of a company's cash is tied up in equipment purchases, having limited financial resources can determine a company's ability to capitalize on growth opportunities or fund new projects.
Renting equipment allows you to avoid capital expenditures, free up funds for new projects, and secure new growth opportunities. Rather than becoming a capital expense, rental expenses can be classified as operating expenses that do not directly impact a company's working capital.
If you intend to use an excavator only occasionally, you should consider renting rather than purchasing. You won't have to worry about storage or upkeep fees. Not to mention that you will not be required to pay for insurance. Renting is also better for anyone with credit problems or limited cash flow. Excavator rentals have grown in popularity in recent years due to their extreme flexibility and versatility on a job site. While many in the construction industry know this multi-tool, it has become more popular for residential projects than any other heavy equipment rental. While purchasing an excavator for a business is an expensive investment, the benefits of renting the machine can outweigh any other options.