Forklifts: should you buy, or hire?

To own, or not to own? That is the question. But when it comes to forklifts, it is easy to see why manufacturers would consider hiring their fleets, rather than buying them outright.

Forklifts are transportable; equipment suppliers are regularly updating their offerings with new capabilities and features; and the number of units required by companies working in the manufacturing industry grows and shrinks in direct relation to an operation’s fluctuating workload.

Manufacturers have been debating the pros and cons of buying versus hiring their forklifts for about as long as the machines have been a mainstay in warehousing environments.

In recent years however, more organisations than ever before have been considering rentals, with many larger companies in particular deciding that for them, hiring these machines makes better business sense than buying them.

If you are one of the many managers out there who are undecided about which option if right for your business, following is our handy guide to the pros and cons of both buying and hiring your forklift fleet.

The case for owning

For:

  • You are paying off an asset for the company;
  • The unit will be serviceable for many years; and
  • You can sell the unit when finished.

Against:

  • The unit will need to be serviced and repaired over its lifetime;
  • A staff member is required to manage the maintenance and upkeep of the equipment;
  • The unit’s value will decrease with hours and age;
  • You will have to fork-out for a replacement if the machine has a major breakdown;
  • It’s difficult to budget accurately;
  • Should your operation or building change, you will have to sell the unit and purchase another;
  • Interest charges are the only tax deductible part of the purchase, plus the unit depreciates in value meaning your capital is tied up; and
  • The unit will show on your balance sheet.

The case for hiring

For:

  • Your payment is 100% tax deductible at the time of the invoice; and
  • You can negotiate cheaper rates if you require extra units, for example during times of increased work;
  • In the case of a major breakdown, replacement is free-of-charge;
  • The rental company takes complete control and responsibility for your fleet;
  • As it’s a pre-arranged ongoing, for example monthly, cost – which includes all maintenance – it’s easier to budget;
  • You can choose from all the latest models;
  • There’s no up-front cost or outlay;
  • Units are not shown on your balance sheet.

Against:

  • No asset.

To sum up, as long as you choose a reputable provider, hiring offers the peace-of-mind of knowing exactly what your costs will be over a specific term. Plus, your staff will not have the added responsibility of managing a fleet, and you will be able to change equipment should your requirements change.

A good hire company will keep all the maintenance records for the equipment you have on loan, allowing you to access them easily for your work, health and safety (WHS) records. Hiring also frees-up your capital for use in stock investments, or other business improvements.

Of course, every company is different, so it’s worth seeking financial advice to work out which option is the smartest choice for your individual needs.

To book a free, on-site forklift cost analysis, click here, or call Lencrow on 1300 536 276.