The Means for the Machine

Flex-Lease may be a good option for a company that needs equipment for fewer than five years. While monthly rates are comparable to those of a traditional 60-month operating lease, the time commitment with Flex-Lease is shorter. In addition, customers can exchange equipment without early-return penalties.

MHM: When is renting more beneficial than purchasing?

Ciaburri: When companies need flexibility and overall cost reduction, rental and leasing programs can help. For example, a third-party logistics provider (3PL) signs a three-year contract with a customer, requiring additional facility space. With a standard five-year building lease, the 3PL is then at risk for the last two years of the contract. If the 3PL can get into a three-year equipment rental deal, it can save money, even if the monthly rate is at a slight premium. In cases like this, typically, rentals are accounted as costs and don't carry the balance-sheet or tax liability of financed equipment.

MHM: What advice can you offer end users as they consider their options?

Ciaburri: First, work with a reputable dealer that will find the right equipment to do the job as well as the best financial solution. Be prepared to spend time reviewing the options and be open to recommendations.

One of the most common mistakes companies make with equipment rentals is losing track of the term. Typically, it is the customer's responsibility to call off the rental, and if they don't, they keep getting a bill for the equipment. That's another reason to choose a reputable dealer. At Abel Womack, for example, we monitor short-term rental agreements that continue for longer than six months. That tells us the customer may be losing track, and we contact them.

My other advice is to partner with a dealership that has a very strong service organization. Ask dealers about their repair response times, first-time completion ratios and parts availability. And, another thing to keep in mind: While lift truck preventive maintenance and repairs due to normal wear and tear may be covered, typically, the end user has to pay for repairs caused by accidental damage. Many dealers have started offering insurance to cover that liability.