Deciding whether to rent or purchase landscape equipment depends on the needs of the individual customer. A landscape superintendent should start by evaluating how often a particular piece of equipment will be used. In the construction industry, the general rule of thumb is to determine whether the equipment will be used more than 70 to 75 percent of the time (30 or more hours a week on average). If so, it is probably best to purchase the equipment. If not, then it is best to rent the correct equipment for each job as required.

Buy

Cash purchase with funds provided from working capital is normally the lowest cost method of acquiring needed equipment when funds are available. Service fees, finance charges and interest expense are eliminated for the buyer. Customer ownership is immediate and equipment cost is shown on the balance sheet subject to the depreciation methods used by the customer. Although outright purchase may provide the lowest total cost, other factors should also be considered.

1. Working capital (cash) which could be used elsewhere is reduced.

2. Outright purchase converts a liquid asset (cash) into a fixed asset (equipment), thereby weakening the customer?EUR??,,????'???s current ratio. Accordingly, most companies prefer to use available credit lines or time purchase plans if ownership is intended.

Lease

Leasing offers several advantages not available with ownership. It encourages a more orderly planned equipment replacement cycle, before maintenance costs become excessive. Leasing also eliminates used equipment disposal problems for the user.

Leasing provides a method of obtaining efficient cost-saving equipment which cannot be purchased with fixed operating budgets. As a rule, it is usually easier to gain approval for equipment under a lease program than as a capital expenditure.

A properly structured lease can provide many financial advantages to the lessee. It can free working capital for other investments while not affecting the customer?EUR??,,????'???s borrowing power or credit line. Lease payments may provide a tax deductible business expense, reducing tax liabilities.

Rent