Guide to Long-Term Equipment Rental

long term rentals

Heavy equipment rentals are a convenient and cost-effective solution for contractors, equipment fleet managers and construction company owners to get the right equipment at the right time, no matter what job comes up. Having the flexibility to procure heavy equipment for one-off jobs is a great way to supplement your existing fleet if you already own staple equipment.

You might already prefer the construction equipment rental option when sourcing big-ticket items like excavators, aerial lifts and material handlers — and one-time equipment rentals are a great short-term option. But, you can also arrange long-term rental agreements to ensure you always have access to valuable, high-quality equipment.

Why Rent Construction Equipment?

Renting construction equipment makes a lot of sense to many businesses involved in earthmoving, road building and general construction of industrial, commercial or residential projects. There are a lot of reasons why it’s beneficial to rent or lease machinery, but it always comes down to the business's bottom line.

Ultimately, the decision to rent or lease equipment is a matter of convenience and cost. It’s also a matter of short-term goals and long-term strategy. Deciding to rent construction machinery requires making a cost-benefit analysis and a thorough business plan involving current and future contracts. Here are the top reasons why long-term equipment rental is beneficial to a company’s overall performance and financial security:

  • Capital management: Renting equipment for long-term projects doesn’t command a cash deposit or a permanent commitment. Equipment rentals allow you to predictably manage cash flow, and this is one of the strongest reasons why company owners choose to rent.
  • Tax implications: Equipment rental is a business expense that’s completely taken off the balance sheet. Although the complicated tax laws allow pro-rated deductions for equipment purchases and allow the machinery to show as an asset, long-term equipment rental can also have positive tax implications, and this is a decision to discuss with an accountant.
  • Depreciation and value: Renting construction equipment places the depreciation factor on the dealer or supplier. All machinery has a guaranteed depreciation rate no matter how low the usage hours or how well maintained it’s been. Placing the depreciation on the equipment dealer rather than the renter can have real value for a construction company.
  • Servicing and maintenance: All long-term equipment rental contracts place servicing and maintenance responsibilities on the dealer as well. Rental equipment suppliers absorb all costs of routine maintenance and are responsible for unexpected repairs. Relieving a company of service work frees up time and capital, which can deliver true convenience and value when paired with long-term rental agreements.
  • Availability and versatility: Having a long-term rental contract for construction equipment allows a company to be versatile. Readily available machinery allows companies to expand their capabilities and profit from additional jobs. Versatility includes having the freedom to exchange equipment to meet certain contract parameters.
  • Competitive edge: Construction is a project-based, competitive industry. To achieve maximum profitability and ensure future work, an efficient construction firm needs as many competitive advantages as possible. Long-term equipment rental agreements are another effective tool designed to help you expand your company's capabilities and become a leader in the marketplace.

Short-Term vs. Long-Term Equipment Rentals

There’s no exact definition of what constitutes a long-term equipment rental contract. Generally, long-term rental agreements differ from one-off or short-term contracts by the length of time they’re in place. You can discuss and clarify your long-term rental needs with a construction equipment rental dealer like The Cat® Rental Store network.

The Cat Rental Store network offers the world’s largest construction equipment rental fleet. This premier international outlet supplies diverse machinery for projects ranging from dam building to high-rise commercial construction. At The Cat Rental Store, we help business owners determine the necessary equipment they require, assist in finding an appropriate timeline and offer solid advice to help construction businesses complete a comprehensive business plan.

Part of a thorough business plan is setting equipment rental contracts in place. Rental contracts don't have a fixed long-term period, as there's no one-size-fits-all approach to rental agreement time frames. How long a company might require rental equipment is unique to an individual business, but it’s a vital part of planning The Cat Rental Store contributes to. Here’s a general overview of one-off, short-term and long-term equipment rental periods:

  • One-off rental contract: One-offs are quick in-and-out rental deals where a company only requires a particular equipment piece for a single job. This might be by the hour or a day-to-day basis. One-off rentals are simple arrangements where the dealer drops off and picks up a machine being used for a fast and easy task.
  • Short-term rental contract: Short-term rentals have a bit longer time frame than one-offs. That might be a few days or possibly a few weeks where a machine does the job and then returns to the dealer. Short-term rentals allow a company to experiment with different equipment before entering into a longer arrangement.
  • Long-term rental contract: Long-term agreements are lengthy and sometimes semi-permanent contracts. These arrangements cover periods from a month to over a year. Long-term rental contracts give the construction company assurance that the equipment they need will always be available and that the supplier will keep it in good condition. Renting long term also assures the dealer that their machinery will be in reliable service and not sitting idle.

Long-term equipment rentals make a sound business case for many construction companies. With long-term rentals, they conserve cash, assure reliable performance and benefit from having equipment available for work as needed. However, deciding to rent long term requires a comprehensive business plan to determine financial feasibility and weigh options.

Complete a Thorough Business Plan

Operating a construction company without a thorough business plan is like trying to build a project without blueprints. Without planning a serious matter like long-term equipment rental, a business could enter into a rental agreement that doesn't meet their needs and can end up delaying projects.

Many business plans start with creating a matrix. This simple planning tool lets company owners or managers visually absorb factors that influence their decisions. Developing a long-term rental matrix as part of a comprehensive business plan involves careful consideration and detailed analysis. Here are some factors to consider in completing a thorough and strategic business plan involving long-term rentals:

  • Project length: If renting construction equipment for a specific project, then the length or duration the machinery is required for is a critical factor. Long-term renting ensures the equipment is there for the whole period it’s needed and the business isn’t caught short at a critical moment. Project length should be at the top of the business plan matrix list.
  • Equipment use: Using equipment is another crucial factor in completing a thorough business plan. Use goes beyond duration and takes in factors like using the equipment for assorted job tasks, not only specific roles. Cross-using machinery makes practical as well as financial sense and should be on the matrix list.
  • Trends: Technology changes rapidly in the construction equipment world. Machinery that’s current today might be obsolete in the near future. Long-term renting gives a business the freedom to return outdated equipment at the term’s end. This point is a pertinent part of the planning process.
  • Familiarity: Long-term renting allows company owners and operators a decent period to get familiar with the equipment. Being familiar contributes to being efficient with a machine, and this has a positive return on profit. As profitability is the main reason for being in business, this item belongs near the top of the business plan list.
  • Financial impact: Drilling deeper into the profitability portion of a company’s business plan, every decision made should include how it impacts finances. One of the chief reasons many construction companies choose a long-term rental over buying equipment is how it affects cash flow. As they say, cash is king, and retaining it is a paramount financial impact to consider in business planning.

Determine the Necessary Equipment

No business plan is thorough without including the equipment necessary to execute it. Successful execution stems from careful planning, and that’s what the matrix helps to achieve. Weighing options to rent long term or make a purchase commitment is part of the plan, and it involves knowing what equipment is really required.

Contractors need to get a solid idea of what equipment they truly need. They must know what machines they’ll get the most value and use from. Here again, it’s helpful to make a list of factors determining the necessary equipment for their contracts. These are some helpful suggestions in getting the right rental equipment for the job:

  • Application: This is probably the most important consideration point in determining which equipment is necessary. Most construction machinery is designed for specific roles such as excavating, paving or lifting workers to heights. Having the right equipment that’s sized for the role delivers superior performance compared to getting by with a substitute not intended for a site it’s sent to.
  • Multi-use: Some construction equipment is more flexible than others. Today, many contractors find that skid steers and compact track loaders are highly versatile and offer great multi-use. That includes applying the myriad of work tool attachments available from long-term rental dealers like The Cat Rental Store network.
  • Duration: Contract lengths seriously affect the necessary equipment for the job. If it’s a short duration, then a one-off rental agreement is excellent to source a highly specialized machine for a single task. However, for day-to-day use over the long haul, then contractors must carefully choose the right equipment to get maximum efficiency and economical operation.
  • Transportation: Moving machines between jobs normally requires other equipment to transport them. With long-term rentals, transportation isn’t as much of an issue, although moving machines can be expensive. Carefully determining the necessary equipment reduces the likelihood that machines have to be swapped before settling on the right model.
  • Lead time: In busy economic times, there’s a high demand for construction equipment. Knowing and selecting equipment necessary for the project allows sufficient lead time to source machinery. With proper planning, the necessary equipment will be available when it’s needed and entering into a long-term rental agreement ensures the machine stays on the job for the entire project duration.

Commit to a Timeline

Once a company decides that long-term rentals are their best option and knows what equipment is necessary, they must commit to a timeline. This ensures the exact machinery will be ready to go when it’s needed.

Calculating a realistic timeline isn’t difficult. However, it requires forethought. Here are factors that build a realistic timeline to ensure the right equipment necessary to undertake the specific job will be available for a long-term rental contract:

  • Service dates: Committing to a timeline involves setting service dates. This includes taking delivery and returning machines. Service dates are significant for both the construction company and the heavy equipment rental supplier as it allows them to plan and depend on the machine being in or out of service at a specific time.
  • Project length: Often, projects tend to run on longer than planned. Delays are inevitable in construction work, and there are many reasons for that. It’s better to commit to a longer project length in a rental agreement to avoid losing the machine when it’s necessary to complete a job.
  • Financial situation: Cash flow is always up and down with construction work. By committing to a precise timeline, company managers can plan for expenses guaranteed in a long-term rental contract. This makes sure the bills are paid, and there’s no interruption from a cash-flow shortage.
  • Operator training and safety: Renting long term allows operators to be safely trained to run machines. Part of committing to a specific timeline is ensuring space is allowed for a familiarization period at the start of the work. Experienced companies like The Cat Rental Store know this and work with contractors to make sure training time is safely built into the rental timeline.
  • Commitment to the contract: Committing to a timeline is essential to make sure events unfold as they should. Committing to a rental contract is also vital. Long-term equipment rentals are meaningful business ventures. It’s here where the folks in The Cat Rental Store network truly help their long-term customers.

Long-Term Equipment Rental From The Cat® Rental Store

The Cat Rental Store network links Caterpillar rental equipment dealers across America who supply long-term agreements to the nation’s construction and other industries. Cat rental dealers work with customers like you to ensure they plan and commit to quality equipment and machinery that get the job done in the long term.

At The Cat Rental Store, you have direct access to long-term rentals involving earthmoving machines, skid steers, compact track loaders and power generators as well as over 60 allied brands for aerial platforms, concrete works and air compressor jobs. All Cat rentals are safe, reliable and offer the newest technologies. At The Cat Rental Store, knowledgeable staff give you expert advice with onsite support and are available for operator training where needed. For more information on Cat equipment and your long-term rental needs, find a location near you and rent whatever you need from people who do whatever it takes.

 

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