Leasing of yellow machinery, a low-cost solution

If your business is in the process of expansion, you have achieved a new construction contractor you need to renew your yellow machinery, it is important that you know the options you have to make this change without affecting the financial health of your company.

Yellow machinery is a ‘heavy’ concept in every way: to own, operate, and maintain it resguardarla is one of the most significant costs for construction companies. However, without this type of equipment, they can not fulfill their main function, so it is important to have it in optimal condition and renew it.

The Rock & Dirt and Ritchie Bros companies highlight that some of the advantages of buying yellow machinery are:

Economical savings if you use machinery intensively and have several projects in operation at the same time
Disposition of the team at any time, no matter when a project is activated
When you sell it you can recover part of your investment
However, there are some disadvantages to investing in the machinery of this magnitude:

If your company’s profit margin is not enough, an investment of this magnitude reduces it even more
When you have your own equipment you must pay for storage, maintenance, and transportation from one location to another
Having machinery means having an asset that depreciates as time passes
Reduce your company’s cash flow and payment capacity
Machinery is one of the most depreciating fixed assets in construction companies. The depreciation of the assets of the construction companies in Mexico amounted to 16,362 million pesos (mdp) in 2014. Of this total, 60% (9,817 mdp) was represented by the machinery and equipment for construction, the rest for other assets, according to data from the 2015 Annual Survey of Construction Companies of the National Institute of Statistics and Geography (INEGI).

One of the best options that owners of construction companies have – regardless of their size – to use yellow machinery when they have a project is financial leasing, which is recommended under the following conditions:

You need the equipment for a long period, but you do not want to invest
You want to renew your equipment without compromising all your capital
In Mexico there is a wide range of equipment leasing by suppliers, however, there are financial companies that also offer this service with very favorable conditions. What is the difference of resorting to the latter?

The lease with a finance company allows the lessee to acquire the property at the end of the contract in exchange for a residual amount (the income contributed is taken into account).
It allows the tenant to rent equipment from different suppliers, either national or international.
If you need a team in the middle of your project and do not have the resources to obtain it, the financial leasing company provides the capital to dispose of the machinery.
This type of operation allows the construction companies to obtain tax benefits since the payment of the rent is considered a deductible expense.
If you are convinced to lease machinery by a financial company, do not forget that although generally, the suppliers take pains to offer new and reliable equipment, it is their responsibility and yours (of the tenant) to cover the breakdowns, maintenance, and other eventualities. That’s why it verifies that the supplier is trustworthy and offers you all the substitution guarantees.

How to access the lease?

Choose a provider
Request a quote
Go to the lessor and submit the quote
Choose a rental plan
Use the equipment
At the end of the contracted period, you decide if you buy the equipment or continue with the rent but again equipment
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