Ponder Environmental Reduces Invoice Processing Time by 99 Percent While Becoming More Responsive, Safer, and Connected with GeoforceView Our Case Studies
If You Rent It, Track It: Solving Challenges in Rental Equipment Operations
Losing visibility of your rental equipment and assets can mean losing money, time, productivity, safety, sanity…
This article aims to recognize the unique challenges in the rental equipment industry while offering solutions to overcome them.
Making the Most Out of Downturns: Why Rental Companies Have an Advantage
The rental equipment industry is, by nature, resilient. According to McKinsey, the rental market for machines has often gained share during economic downturns. This is because decision-makers, looking to conserve capital expenditure, often focus their efforts on the rental market. This fact is not lost on the American Rental Association (ARA), who expect an accelerated revenue recovery of 11.2% in the construction and industrial rental industry in 2022.
With your competitors likely vying for a portion of this revenue, there is no better time to address your current challenges in the field, automate labor-intensive processes, and claim your share of the market.
Rental equipment companies have specific challenges. With tasks that include quotations, analytics, cash flow management, equipment lifecycle monitoring and asset/fleet management, visibility across the board is key to achieving operational efficiency.
At ground level, field operators struggle with deploying assets quickly due to paper-based processes. While manually verifying invoices, they find themselves in disputes with customers due to missed rental days and often end up underbilling. This revenue leakage is compounded by slow processing of equipment quality post-return or missed maintenance checks. Visibility challenges also make it easy for equipment to be stolen. Only 23% of lost assets from theft in the construction industry are recovered.
This is why more and more companies are taking control of their operations with advanced asset tracking technology.
6 Key Challenges that Prevent Rental Companies from Leveraging their Advantage
Field operators perform a balancing act in the field. Whether their tasks are spread across one piece of equipment or tens of thousands of assets, challenges can arise. Despite being in a buoyant industry, the risk of loss—whether revenue or customer—becomes very real. Here is a drilldown into the specific challenges experienced by rental companies and how to overcome them:
1. To Rent or Buy?
The Dilemma: Rental companies often have a portfolio of assets that consist of rented equipment with a view to own, fully purchased equipment, or a combination of both. How can rental company owners find that perfect balance of rental and owned equipment for their operations?
If you use a particular piece of equipment approximately 70 percent of the expected lifetime, you should own it rather than rent it. Why? This is the break-even point for equipment ownership.
— Daily Journal of Commerce Oregon (In Construction)
The Root Cause: Without intelligent asset data, a rental company may not be able to see the ‘popularity’ or ‘unpopularity’ of certain assets to balance their fleet. This can lead to increased operating costs and a lower return on investment.
The Solution: Using technology to track assets allows you to have instant access to asset location, asset usage, and rental intelligence. You can make informed decisions on asset acquisition, ‘right-size’ your fleet and optimize asset deployment.
2. Securing Finance & Protecting Debt
The Dilemma: Clear financial records and business projections are essential for rental equipment companies looking to attract investment or borrow unsecured finance. But what if there’s insufficient cashflow from your assets?
The Root Cause: Not knowing where your assets are can negatively impact asset utilization and cashflow potential. This hinders your financial standing with credit companies, resulting in a higher cost of capital.
The Solution: Asset tracking technology allows you to utilize your assets better, service its loan repayments and project sufficient cashflow to secure a lender’s confidence and empower long-term lender partnerships.
3. Siloes that Trigger Dominos
The Dilemma: Manual rental operations can create a ripple effect across the entire business—slow decision-making, delays in rental quotations to new customers, and even slower asset deployment. Is it time to overcome siloes?
The Root Cause: Staff in rental operations are accustomed to working with difficult and siloed operations—it is the ‘norm’ to use paper, spreadsheets, and whiteboards to track assets. Significant time is spent chasing assets, leaving little time for value-based tasks like monitoring equipment lifecycles.
The Solution: Digitalizing operations with asset tracking technology can empower you, your crew, and the sales team by ensuring a shared view of rental locations, availability, schedules, quotations, and equipment-readiness, all on a single platform. Use the mobile feature, and access these even when you’re on-the-go.
4. Picking Up the Wrong Tab
The Dilemma: Rental equipment owners are always the last to be paid as they place low on the payment chain. The absence of accurate information to verify invoices also compounds these delays.
The Root Cause: When days on site cannot be confirmed, field operators find themselves navigating an uncomfortable bill negotiation process. Some are compelled to file a mechanic’s lien—putting the onus of payment also on site owners at various job sites where an asset may have been moved to—making the scenario even more painful.
In a field productivity survey conducted with 540 construction professionals, it was found that 80% spent a significant amount of time during the work week pursuing payment.
— Construction Dive News
The Solution: Intelligent asset tracking technology enables fluid visibility on asset movement and days on site. It creates transparent tracking systems that can be shared, ensuring everyone—the rental company, the customer, and third-party suppliers—works off the same page, with no surprises.
5. Maintaining Rental Equipment Performance
The Dilemma: When field operators are not able to monitor the use of an asset over its equipment lifecycle, they are unable to optimize its use, understand its lifespan and know when it is ready to be retired and disposed of.
The Root Cause: The lack of visibility in an asset’s maintenance background means that field operators cannot easily pull up compliance certificates or release an asset to a new customer. This not only hampers scheduling plans, but it can create further issues downstream—unexpected breakdowns, having to send maintenance staff to a customer’s site, increased costs, and unhappy customers.
The Solution: Intelligent asset tracking pre-warns you to maintenance appointments, processes around returned equipment (inspection, cleaning, and fueling), and can pull up compliance certificates to be viewed and shared with customers. You can schedule assets, reduce risk, keep staff on value-based tasks, and increase profitability.
6. Losses from Theft
The Dilemma: The National Insurance Crime Bureau (NICB) and National Equipment Register (NER) found that an estimated $300 million to $1 billion is lost nationwide due to construction theft and that only 23% of it is ever recovered by law enforcement.
The Root Cause: Now, with longer equipment idle times due to business uncertainties and more staff working remotely, the lack of visibility on the ground is greater. Theft brings capital losses and project delays that can impact the bottom line significantly.
The Solution: Asset tracking technology ensures full and continuous visibility of your equipment, even when it’s moving. The investment you make in an intelligent platform far outweighs the downsides of equipment loss.
Learn about Geoforce:
- Award-winning Track & Trace software
- Our Rental Manager suite.
- Device Overview & Comparisons
- Case Studies