How to Match Forklift Financing to Your Workflow Requirements
Every business has its own workflow. Its own throughput requirements, seasonal adjustments to teams & equipment, and other aspects to your unique operations.
Within those operations, we all have one consistency – Forklift Requirements. Certain tasks always need a forklift.
The question is, how consistent should those requirements be? Does it make the most economic sense to just buy new forklifts every year?
Not always. In fact, sometimes having too many forklifts on the floor is just as bad as having too few.
You have four options when it comes to financing forklift requirements. Let’s go through those four options today.
Start with a Fleet Review
Does your current fleet match your workflow? Ask these questions and you might be surprised:
- What is the difference between our throughput in peak season versus off season?
- How much equipment do I need to get through peak seasons?
- How can I match leases to cash flow on my equipment accordingly?
- How many hours am I utilizing this equipment annually?
- How much flexibility does my fleet require?
- Do I currently work under a contract term with suppliers?
- What are the conditions of my facility?
- How many shifts do I run on average?
- What is the warranty on my forklift battery and charger?
With answers from questions like these, you’ll get a good sense of how often your team needs forklifts in play. Knowing that, you can work financing to your advantage.
The 4 Forklift Financing Options Available to You
Here are the 4 best methods of equipment finance, organized from most flexible to least flexible:
1. Total Flexibility – Short Term Rental
The most flexible type of equipment finance, a short-term rental is exactly that. Renting forklifts for as little as 1 day, to meet surging demand.
Benefits:
- Ultimate flexibility – 1 day, 1 week, 1 month, etc.
- Utilization – You’re no longer in the forklift business; your team just uses the forklift.
- All-encompassing Service – The Cromer team handles service, property tax, repairs, tires, etc.
- Peaks and Valleys – Flattens out peak season, and reduces idle equipment during off season.
- Rapid Growth
2. Semi Flexibility – Long Term Rental
The goal with Long Term Rental (or LTR) is to streamline the rental process to match more of a Lease style, while still providing some flexibility.
Benefits:
- Single Party Lease – Cromer finances the unit directly. You don’t have to deal with a bank.
- Some Flexibility – Cromer can work flexibility into the rental period, for seasonal use or months that require flex due to throughput.
- Guaranteed Maintenance – The Cromer team handles maintenance for the entire rental period.
- Utilization – Match your workflow needs to your growth expectations.
3. Less Flexible – FMV Lease
The idea with FMV is that you have no intentions of owning the unit. You are matching the economic life of equipment to your warehouse’s forklift requirements. The flexibility of the FMV lease lies within the ability to identify lease terms that work.
Benefits:
- Aggressive rates – FMV gives you the best rates.
- Factory-subsidized lease rates
- 3rd party handling of the portfolio – The bank handles the portfolio.
- Multiple lease options available
4. No flexibility – Cash Purchase/$1 Purchase Option
You take full ownership and depreciation of this unit. This option’s best if your usage requirements are low, and/or the economic life span of your forklift is long. Good choice if you want cash value of the units at the end of your usage period.
Benefits:
- Complete ownership of your unit/fleet
- Tax value with depreciation/accelerated depreciation
(In case you’re wondering, yes—Cromer provides all four of these options to our customers.)
Better Financing, Optimal Forklift Use
Let’s finish off with an example. Say you have a warehouse with 3 forklifts. But at any given time, only two are in operation. Your answer to Question #4 above is, “Less than 500 hours.”
Based on this, you could sell one of your forklifts, and contract with a rental provider for those months when demand spikes. Your maintenance budget drops by 35%, while your rental budget only increases about 20%. Accounting is very happy!
Knowing your forklift requirements helps you optimize financing for them year-round. Optimal financing helps budget across the board. Everybody wins.
Until next month!
-The Cromer Team
Cromer Material Handling
Deal of the Month
2020 DOOSAN LPG FORKLIFT – ONLY $18,000
For the April Deal of the Month, we have a forklift coming off the rental fleet. This is a 2020 Doosan G25N-7LP, a 4-wheel sit-down forklift with a 5,000# capacity.
These are pneumatic tire forklifts, built for steady work day in & day out. It has a three-stage mast with side shifter. At present, it has 3,042 hours of use from rental work. It’s received a full Cromer maintenance service, so it’s ready to go back out into the field.
Want to add this Doosan to your fleet? Pick it up from Cromer for only $18,000.
To get this Deal, call Cromer at 800-464-3225 and ask for the April Deal of the Month!