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Would you Lease or Buy your Cleaning Equipment?

 

Steve Kadah, the Regional Director of Operation, AKC group of companies speaks to Clean Middle East about the pros and cons of each.

 

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Facilities Management
 
October 13, 2020
 
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Would you Lease or Buy your Cleaning Equipment?
 

Steve Kadah, the Regional Director of Operation, AKC group of companies

After you’ve chosen the right cleaning equipment, the next big dilemma is to decide between renting it, buying it or leasing it. Steve Kadah, the Regional Director of Operation, AKC group of companies speaks to Clean Middle East about the pros and cons of each. 

Leasing vs renting equipment 

In general, the concept of cleaning equipment being rented is not a new concept in the U.A.E.  The rent module would refer to a daily or monthly rent, whereas leasing gained popularity much later. When high end products came into use. Because these products are expensive, clients do not  want to or don’t deem it feasible to buy this equipment. If they have a project that lasts for a few months or couple of years , they use the concept of equipment leasing. It helps them to fulfill their needs in projects and use the latest available technology in the market.

Leasing in the GCC region

GCC is still new to the concept of leasing as compared to Europe or other parts of the world. Before the pandemic began, we had many contracts in place to start the leasing of our newest equipment. So from experience I can say that the market has warmed up to the concept of leasing and they are aware of its advantages.

Factors that contribute to the need to lease or rent equipment

First of all, a lease is flexible in terms of length. It usually starts with a duration of 3 months where the client is provided with high end and up to date technology instead of them using old bought machines that can achieve results but don’t serve the purpose in an efficient way.

Consider the case of Expo 2020 - an event that lasts for a duration of 6 months and all the new technology you choose has to be deployed in those 6 months only (nothing less, nothing more). In such a case, two scenarios arise -  the first one has already happened, i.e. the pandemic. Had you bought all those machines before the Expo, you would have them with no use at all for another year of time.

The other scenario would be that after the six months of Expo, you would end up with a huge stock of cleaning machines that might not be implemented into a different project considering the magnitude of the Expo.

This is where leasing comes as the solution, you deploy machinery for a short time ahead of the project and finalize your lease by the time the event is over.

Leasing or renting vs purchase of cleaning equipment

Buying an equipment is the better option if you have a clear plan to use the equipment for at least 3 years where you can make the return on your investment. Leasing is better in the opposite case or when you have a unique project that doesn’t usually occur and it requires a certain type of equipment that is not usually sourced by them. In that case they can look into the leasing option in order to win a contract and have a better cost of investment for a specific period of time.

Equipment more suited to being leased or rented

I would say machineries and large equipment are more suited to being leased or rented, but at the same time you can’t lease a unit that costs 500 dollars to buy. It’s just not beneficial for both parties and it will add extra expenses on the supplier and the client since those kinds of things depreciate quickly.

The beauty of leasing comes when you get an all included package and a worry free experience where the supplier will take care of everything needed during the lease period.

It starts from the moment of decision, we deliver, deploy, train and supervise on a periodic schedule, all of that on the initial stage and then comes the free maintenance, the included consumable based on the agreement usage hours to the instant replacement in case something goes wrong.

And just to point out “ agreement usage hours “ don’t involve any hidden costs at all. On the contrary we ask the client what is the expected usage time per day in order for us to offer the right amount of consumables and the right leasing terms, which in a way gives you a very clear sight on the total cost of the unit operation with no surprises at all.

The challenges

There are many challenges at the moment but we are willing to overcome all of them. The hardest one is to change how we look at the leasing benefits because it might seem a bad idea at the beginning and it might involve different types of approvals from the clients. Add to that we need to have a separate team who handle the leasing. We also need to invest in expensive software that will first prove the outcome to the clients and second will help the purpose of us as a supplier.

Benefits to the client
We provide data to the client that will tell them exactly how much of a downtime they avoided, how much area was cleaned, how many hours was operated and how much of water has been saved, that and more comes all as part of the benefits we expect to deliver to the clients.

About the author:
Steve Kadah is the regional director of operation at AKC group of companies with more than 15 years of experience in the cleaning industry in UAE and the GCC.

 

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