Equipment, especially large equipment such as Tower Crane and Batching Plant is an expensive capital cost that must be planned and might require a “good year” (or a couple) to come about. When you purchase a piece of capital equipment, your money is tied up in it until you sell it, and if you used it well and kept it long, sale offers might come in lower than you would like. Not having a large chunk of money tied up in a piece of capital equipment frees up funds for you to pursue opportunity and maintain other important parts of the business.
In the same way the taxation laws looks at rented equipment one way and owned equipment another way, so do banks. They do not see rental expenses as a liability on the balance sheet, so the option to rent equipment maintains stronger borrowing power for a business. Thinking in terms of assets and liabilities, capital-equipment debt or an aging machine could weaken a business’ overall financial picture depending on the numbers and circumstances involved.
