To Buy or to Contract Hire a Forklift?

To Buy or to Contract Hire a Forklift?

The time has come to introduce a new forklift or fleet of forklifts to your business and you may be considering whether to purchase the forklift(s) outright or to hire them over a fixed period of time. You know your business, but do you know which approach is best for your business? To help make your decision a little simpler, we have highlighted below some of the key advantages and disadvantages to buying a forklift(s) outright versus opting for a contract hire agreement.

Purchasing your Forklift(s) outright:

Advantages:

• Ultimate ownership to use as your business requires 24 / 7 without any penalties or strict usage clauses.
• If you have a light duty, clean and easy environment, It may be more cost effective to purchase the forklift in the long run: in terms of the residual value, the cost of servicing, repair and consumables.
• If your budget is restricted, purchasing a more economical used approved forklift may be more cost effective helping short-term cash flow.
• No contracts, minimum terms or commitments.
• Furthermore you can depreciate the assets through your company accounts for tax efficiencies.

Disadvantages:

• If your forklift is out of its warranty period then you will be accountable for any repair costs as and when they occur.
• Purchasing a forklift or fleet of forklifts outright requires a significant initial capital outlay thus impacting on your business cash flow.
• The flexibility to adapt to a changing operating environment is restricted if you own your equipment outright. What if you need to
• quickly change your forklift for one with a higher capacity, or a higher lift height?
• With technological enhancements in the forklift industry, you could quite quickly end up owning a forklift that is out-dated and inefficient.

Contract Hire through a forklift dealer:

Advantages:

• Contract hire enables you to acquire the use of equipment without capital outlay, which helps your business cash flow
• You are able to budget for the future with fixed costs every month without any unexpected maintenance costs arising.
• Contract hire allows you to always have the most up-to- date equipment and technology, as once your equipment ages or your contract term end, your equipment can be replaced with new.
• At unpredictable peak periods or when essential equipment breaks down, short-term hired forklifts can provide immediate solutions.

Disadvantages:

• In a business where the forklift(s) will have heavy usage, you could quite easily exceed your contracted hours thus leading to penalties and additional charges
• You will be accountable and charged for any damages to the equipment.
• Commitment to longer-term contract (usually 3 – 5 years).

There are several points for consideration here. Ensuring you have the correct equipment is important to the operational performance of any company. If you would like advice for your business, please contact one of our specialists and we’ll be glad to help you with your decision making process.