Test equipment rental: strategic approach to capex & opex

George Acris
Director of Marketing, Europe
Test equipment purchase & rental options
When it comes to budgets, test equipment rental can provide an excellent method for obtaining the required items, especially when a host of flexible solutions are available.

One can’t imagine that, in a logistics business, individuals would be allowed to source vehicles piecemeal as they identified a need. A central fleet management team (internal or outsourced) would review any requirement and address it cost effectively in line with the company’s strategic policy. Test equipment is as central to a technology business as vehicles are to logistics businesses. Yet industry research specialist Frost & Sullivan estimates that equipment is only used between 15-to-20 per cent of its life, leaving a very expensive technology graveyard of unused investment for most organizations.

Design, verification, installation, development, commissioning, production, troubleshooting in the field: no matter what stage your development project is at, your team will need the necessary test and measurement equipment at the right time. While it is crucial to be prepared, it’s not always possible to accurately predict exactly when the equipment will be needed – or how much of it will be required. Projects often subject change at short notice. In rapidly evolving market sectors there is also the problem of technological obsolescence. Nobody wants to purchase an expensive stock of equipment only to find that in a matter of months the technology has moved on; the solution has become obsolete and the investment has been wasted. To get the most out of limited resources, a smart approach is to look at all the options, rental, leasing and new or used purchase.

The key question to consider is what timeframe do you actually need the instrument for? It can be a false economy to commit to the purchasing or leasing of an instrument because it may be needed in the future. By the time the next development project comes around, the instrument you own may not support the right standards, offer sufficient performance or may in some other way fall short of the new requirement.

Rental is a great tactical option to get hold of a test instrument quickly with no long term commitment to meet the needs of a specific project or to cover for an instrument that is being serviced. Customers also turn to rental to get their hands on an urgently needed instrument while they wait for the purchase to be authorised, or because they have used up their capital allocation in that financial year. Many rental companies offer attractive financial options including Rent-to-Buy, where a new unit can be rented for a period of six months and then be converted into a purchase or a lease, with rebates for rental payments applied. 

Rent-to-buy suits companies that need the test equipment now but do not have the budget available in the current financial year or know that sign-off will take months to go through. It allows companies to pay a fixed percentage of the list price per month to rent the equipment for at least six months then return it, convert to a lease or purchase it outright at the end of the rental period. It’s usually offered in conjunction with the Original Equipment Manufacturer, which means that the specifications of the equipment can be agreed together, with the rental company buying the instrument and providing you the flexibility to decide what to do later. 

Different test equipment leasing methods are also available:- finance leases, operating leases and operating leases with services. These enable companies to only pay for the equipment while they need it, have no upfront costs and have the flexibility to upgrade the equipment in the future. A divide-by option lets companies spread the costs of buying equipment over 12 months at 0% interest.

A good test equipment rental service means that someone else deals with managing test equipment and keeping up-to-date on the latest technology, leaving you to focus on delivering your projects. Rental companies can now do more than just supply equipment; they can also help you manage the equipment that you already have.  Companies like Microlease can offer a complete asset management service for your test equipment, which includes compiling an inventory, taking responsibility for scheduled maintenance and calibration, and even disposing of surplus equipment.

With strategic advice from Microlease on the mix of owned/rented equipment, one major telecoms infrastructure provider reduced its annual test equipment costs by over £150,000. With Microlease’ help, the company has increased utilisation of its own test instrument fleet to over 70% - more than double the industry average. This was achieved by creating an accurate inventory of instruments the company owned and redeploying equipment effectively. In consequence, more than 99 percent of the field service team’s requests for test equipment units are delivered on time and functioning, effectively eliminating delays to installation projects due to non-functional/incomplete test solutions.

Working with your rental provider on a strategic basis can help you acquire, use and dispose of test equipment assets with maximal financial efficiency, and help ensure that the right tool for the job is on site, on time and fully working on time, every time.

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