The Time Economics of Lift Trucks

1. The Time Economics of Lift Trucks Koala Trucks Forklift Wholesalers 96 Hassall St Wetherill Park, NSW 2164 1300 456 252

2. Businesses that use machine assets such as lift trucks can face the problem of whether to buy, rent or lease them. Understanding the economic value and the frequency of usage of the machine helps in coming up with the right decision. Renting is for Short-time Rentals provide a convenient transaction. The terms are often flexible, but clients may pay a little more for the convenience. For lift trucks, it is advisable to do short-term renting for three months. The continuous renewal of contract may result in having to pay the same expenses, or even more, as buying a lift. Renting is only ideal for businesses that use the machine during short peak seasons. Conversely, some companies have the difficulty of finding ideal lease agreements, ending up renewing short- term contracts repeatedly. Leasing for Fixed Pricing Leasing allows customers to enter fixed long-term agreements that last for a year or two, or even more. This is for businesses that want to lessen computing and recording capital activity. Owning a machine asset needs to set goals of replacing them, and tracking down expenses on repairs and maintenance. The idea behind leasing is that the lift has its lifespan. This is ideal for companies that use trucks more than 1,500 hours annually. It allows the company to have the equipment only within its well- performing years. Some, however, commit the mistake of leasing the same fleet of trucks and not taking advantage of modern fleets.

3. Buying An Asset The decision to buy depends on how a business sees the economic contribution of the truck through its lifespan. Every machine asset will reach a time of depreciation and deterioration. It’s important for companies to maximise the use of the machine in the workplace during its performing years. Moreover, they should foresee the expenses of maintaining and repairing the truck. Another suggested buying scenario is that the business will only use the lift less than a thousand hours per year. This means lower expenses on repair services. In this case, a company should have less concern on the depreciation of the asset. The logic of buying, leasing and renting is simple, but may vary per scenario. If an asset increases its value through time, then it is better to own it. But, for depreciating assets, renting or leasing can be better options.

4. SOURCES: http://www.koalaforklifts.com.au/products/forklifts-hire http://www.lb7.uscourts.gov/documents/06c6163.pdf http://www.referenceforbusiness.com/encyclopedia/Pro-Res/Replacement-Cost.html