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No hard and fast rules in the buy vs rent debate

You’ve scoured the marketplace, searching for a waste baler to suit your specification.

You have acknowledged the benefits it can bring to your enterprise, and you have liaised with your preferred supplier to ensure the investment lies within budget.

But before you sign on the dotted line, there is one last thing to consider: should you buy or rent the machine?

There is no simple answer – what is right for one organisation may not suit another and, in fact, a number of slightly different procurement options exist. But the important point is that the market is flexible and there is a financial route to suit everyone.

Concentrating on the purchase versus 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 may have dwindled, for example, as a result of the recession. 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. Providing it is procured from a reputable supplier, it should prove a value-adding asset for many years to come. If or 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 three- to five-year period.

But traditional rentals enable companies to benefit from the use of baling technology while keeping cash in the business as working capital. Many contracts also include full machine maintenance, which helps greatly with budgeting purposes.   

Is there a trend for the types of organisations opting for specific investment routes?

Some may argue to the contrary, but personal experience shows no real pattern, regardless of company size or sector. Bluechip multinationals have recently approached Riverside Waste Machinery for rental machines, while comparatively tiny SMEs have been adamant that they wish to purchase, perhaps because they do not have complex budget authorisation channels that typically restrict expenditure.

Sometimes it quite simply boils down to organisational culture and/or the personality or experience of the buyer – some people simply prefer to 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 that an organisation utilises a specific baler until its needs change, at which point it can upgrade/downgrade according to 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 equipment so that, after a long and successful ‘first life’ with one client, it can be refurbished and recommissioned for use elsewhere.

But they are often easy to maintain and repair, 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 a baler before they even begin their market research. But seeing as waste is not a ‘one size fits all’ industry, why not consider the options?  

Jonathan Oldfield is managing director of Riverside Waste Machinery

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