A major factor to consider as we go into 2019 is whether businesses are likely to make the switch from purchasing waste machinery outright to renting it for a smaller, regular fee. Here, we quiz Jonathan Oldfield, Riverside Waste Machinery’s managing director, on his thoughts surrounding the whole hire vs purchase debate…
Why do you think that many businesses still prefer to own their assets outright, where possible?
Wanting to own an asset outright is quite a British mentality, whether in terms of cars in our personal lives or industrial equipment in the workplace. As a nation, we have – for a long time – opted to purchase goods upfront and own them from day one. Historically, it was rare for someone to commit to an investment that they couldn’t afford.
As time has moved on though, attitudes have changed. Take the automotive sector, for example – many people did not think that the American Personal Contract Purchase (PCP) model coming to the UK would work. But nowadays, instead of a vehicle being sold with a £14,999 price tag, it’s more common to see a ‘From £299 per month’ sticker in a car showroom.
What trends have you seen in the last 12 months which lean towards the renting of equipment?
The last 12 months have seen the biggest uplift – more than 40% – in Riverside customers opting to hire their balers from us, rather than purchasing them. This is a pattern that exists for both new and returning customers expanding their fleet of machinery.
Why is the renting of equipment so attractive to businesses?
The main draw is the range of rental options available nowadays. Finance agreements have traditionally been very rigid, with little movability surrounding the terms. Leases have tied organisations in for long periods with minimal options to exit the contract – without significant penalty – should circumstances change. This has acted as a large deterrent for businesses investing in costly machinery.
The increase in finance options has therefore played a significant part, with some operators selecting a 3 year deal, and others 5 – in many cases the machine will still be there 10 years later! The possibility to make payments on a weekly, monthly or quarterly basis – all to suit the organisation’s requirements – makes this a far more attractive procurement route nowadays.
The agreement of a fixed monthly or weekly sum also allows businesses to plan financially, especially if the fee is inclusive of a service and maintenance agreement. It presents an element of control and makes it easier for many organisations to calculate return on investment (ROI) too – with savings experienced from as early as month one.
Finally, a hire contract presents flexibility should a company need to scale their plant up or down according to demand – in essence they can often swap a machine part-way through an agreement should the need arise.
Has Brexit had an effect on consumer spending when it comes to machinery?
Undoubtedly, yes. And despite the publication of the government’s new resource strategy, which suggests that greater attention is being given to the environment, the fact remains that it is virtually impossible to predict how companies – and the wider economy – will fare.
Throughout this period, many financiers are deterred from committing to any major capital expenditure, but spreading the cost of any investment is likely to feel far more manageable – and industry can’t just grind to a halt.
Amidst the uncertainty, the shift towards a more affordable finance agreement is likely to continue to grow.
Do Riverside offer both hire and purchase options?
Absolutely! Everything we do is designed to offer our clients choice.
If you wish to speak to a member of the team about your baler or finance requirements, call us on 01423 325038 for an informal chat or emailto outline these in more detail.