It can take weeks if not months to decide which baling technology is equipped to satisfy your organisation’s requirements. But when you’ve found the perfect machine, what is the best way to procure it? Jonathan Oldfield, managing director of Riverside Waste Machinery, investigates.
You’ve scoured the marketplace, searching for a waste baler to suit your specification. You’ve acknowledged the benefits it can bring to your enterprise, and you’ve liaised with your preferred supplier to ensure the investment lies within the parameters of your budget. But before you sign on the dotted line, there’s one last thing to consider – should you buy or rent the machine?
As with many areas of business, there is no simple answer – what is right for one organisation may not suit another and a number of slightly different procurement options in fact exist. However the important point to note is that the market is flexible, and there is undoubtedly a financial route to suit everyone.
Concentrating on the ‘purchase vs rental’ debate for the purpose of simplicity, the main options are two-fold – buy the baler outright and own it from day one, or hire it from the supplier for a weekly or monthly fee.
Of course sufficient capital is required if the machinery is going to be purchased, and this is not a luxury that every business has. Some companies’ reserves have dwindled, for example, as a result of the recession, and elsewhere, entrepreneurial start-ups that are entering our evolving industry, may not yet have enough funds in the bank.
For those that do, purchasing offers peace of mind that the baler is owned and, providing it is procured from a reputable supplier, it should prove a value-adding asset for many years to come. If/when an upgrade is required, the baler may even retain an impressive residual value, which means some of that initial investment is recouped.
A ‘bite-sized’ rental fee on the other hand, may be easier for firms to swallow. The terms and conditions of such agreements will vary, and a more complex lease is likely to tie the client into a fixed 3-5 year period. However, traditional rentals enable organisations to benefit from the use of baling technology, whilst keeping cash in the business as working capital. Many contracts include full machine maintenance too, which helps greatly from budgeting purposes.
Is there a trend as to the types of organisations opting for specific investment routes at present? Some may argue to the contrary, but personal experience shows no real pattern, regardless of company size or sector. Blue chip multinationals have recently approached us for rental machines, whilst comparatively tiny SMEs have been adamant that they wish to purchase, perhaps because they don’t have complex budget authorisation channels that typically restrict expenditure. Sometimes it quite simply boils down to organisational culture and/or the personality/experience of the buyer – certain people justpreferto own things.
The circular economy is being increasingly considered in the decision making process, but for different reasons. Renting a baler fits the ‘product as a service’ concept, meaning a given organisation utilises a specific baler until their needs change, at which point they upgrade/downgrade according to their requirements, and the fully functional machine is provided to someone else.
This principle only holds true if the baler is built to last. Reputable waste baler manufacturers will purposefully engineer their machines so that, after a long and successful ‘first life’ with one client, they can be refurbished and re-commissioned for use elsewhere. But they are often easy to maintain and repair too which maximises their functional longevity. This means that businesses preferring to purchase can do so without compromising their commitment to the circular economy. The most important thing is to select a model with scope for changing capacities.
In truth many businesses will already have decided whether they want to purchase or rent the baler, before they even begin their market research. But, seen as ours is not a ‘one size fits all’ industry, why not consider the options?