ForConstructionPros.com

Many rental companies are facing increased pressure to place a higher priority on cash flow due to a variety of economic factors. In an industry that has so much money tied up in capital equipment, this is no easy task.

According to Felix Rodriguez, national accounts manager, rental industry, with online auction company IronPlanet, the need for some rental companies to realign their fleets is critical. "You need to determine what assets to dispose of. You do this by identifying the slow movers, the high-maintenance pieces. In other words, you figure out what's eating your lunch," he says.

Once these items are identified, equipment owners need to find a valuable sales channel through which to dispose of this equipment. Traditionally, equipment owners have had limited options when it comes to selling used equipment: trading it in to a dealer or listing it in the classifieds.

Like buying a new car, many owners believe they will get the best value by trading used equipment in to a dealer when they purchase new equipment. While this might provide leverage for price negotiation on the new equipment, it doesn't always yield the best price realization on the used item. To remain viable, dealers must create acceptable profit margins on each piece of equipment, making it difficult for owners to get premium prices for their used equipment. Geography can also limit owners' choices as many are unwilling to get competing offers from dealers in other locations.

To increase resale value, many owners are now trying to sell their used equipment through classified advertisements. Sometimes this approach yields a higher resale value for the owner. It can often be a time-consuming process, however, creating headaches for sellers who must be available to answer questions and handle prospective buyers.