There can be no doubt in anyone's mind that today's management software systems have changed the way rental businesses operate for the better, but can they improve your bottom line? We talked to leaders within the rental software industry to uncover the ways management systems can save you money. Here's what we found:
As everyone in the rental business knows, setting rates is not a cut and dried, black and white task. Many factors go into it, including volume, equipment availability and increased competition, to name just a few. Being able to determine and store rental rates by product, job type and use location gives you the flexibility to set rates you need to secure more winning bids for jobs.
"With rates, many rental operators establish one static set of rates in their system and revisit them once or twice a year, if that. This approach does nothing to address the fluid nature of rental demand by season or customer sector, and it shortchanges the rental business’s ability to cement large customer relationships by honoring negotiated rates," says J.J. Shea with SBC. "While different rental systems have more or less rate flexibility built in, most allow some flexibility and this should be used to maximum effect."
He continues, "With Enfinity, for example, you can run special pricing on lawn and garden equipment in the spring to drive business, or run special rates in the off season, or discount retail merchandise for a limited time. That’s handled by setting an ‘effective’ date and an ‘expiration’ date for a rate or resale price in the system.
"In addition, Enfinity can further define rates or discounts by type of customer: plumbing contractors, for example, or caterers. We have users who augment this feature with a targeted marketing campaign to companies of that type. Even more specifically, the system can apply certain rates and discounts to a single customer for a date range. This is very useful if a special price is negotiated for the duration of a project or term: Enfinity will apply the special price until the expiration date, and then automatically revert."
Rental systems capture a wealth of data during the course of daily operations, and this data can be used to your advantage. "By using the system’s reporting capabilities to extract data and analyze customer behavior, a rental operator can hone in on the best overall rate policies for the market area and most profitable rates by equipment class, looking at both margin and volume," Shea says. "Rates can also be set to encourage customer behavior that results in quick turnaround to boost equipment utilization. For example, a three-day weekend rate incents a customer to hold onto the equipment even after the job is done, while a lower rate for a Saturday return can speed up getting that asset back into the cycle where it’s available for rent."
Arguably nothing hurts your bottom line more than equipment downtime. Equipment that can't go out on rent or that breaks down on the job costs you money instead of making it. So what if you could prevent those occurrences? Today's rental systems can help.
"It doesn’t matter what you rent, you should be tracking the costs associated with repairing that equipment," says Patrick Haley with Automated Rental Management. "Tracking your maintenance history can tell you how much money you have invested into a particular piece of equipment, when it’s costing you more to maintain than to rent, and how much that asset is worth. Our most proactive customers have automated workflows setup to generate a report of when it’s time to sell an asset before it eats their bottom line.
"Tracking your maintenance also has other values as well. For example, just knowing when an asset is scheduled to be serviced again during the contract entry process can save you trouble when reserving the equipment for a new customer. Furthermore, having this information can help you provide better customer service, which is hard to monetize," says Haley.
Preventive maintenance is another area where today's systems can help, notes Shea at SBC. "This goes right to the heart of rental ROI – both in terms of equipment condition, and availability for rent. Preventive maintenance is one of the foremost ways to avoid costly repairs that exacerbate downtime. It can also make sure that a customer doesn’t have a bad experience. Rental computers do an excellent job of managing this part of the business in terms of scheduling, parts and labor. For example, Enfinity can be set up to schedule a maintenance job based on number of rentals, rental days, meter units or calendar days. It’s an automatic way to ensure consistent service for everything from a routine oil change to major interval service."
Tim Levron at Corporate Services points out that equipment going out on rent might have special testing, inspection or periodic maintenance required for efficient and safe operation. "Identifying units that are in need of work before sending them to a customer's job can save you from having to send a replacement and/or credit rental fees paid because of poor operation," he says. "It can also help prevent injury or death due to neglected equipment."
He adds, "A maintenance and repair tracking system can help you manage the scheduling and completion of work orders, and keeping good records will be of benefit should you need to provide proof of a competent maintenance program. This is also a great confidence builder for your customers by showcasing the quality of your product."
An automated solution designed for common rental activities can simplify data collection by giving you the data points you need and eliminating the ones you do not, says Levron at Corporate Services. "Compromising your data input by trying to 'shoe-horn' rental data like start/stop rental times, ship/return dates and per day/per hour rates into your standard 'quantity/description/unit price' sales order structure leads to mistakes, confusion and extra typing time," he says.
Keep in mind a rental system doesn’t just save you a certain dollar amount. You need to take into consideration all the things that don’t necessarily have a set monetary value. "For example, you can have a rental system with some nice financial reporting functionality, but if your administrators or sales people are spending time rekeying information from your rental system into your accounting system or across multiple spreadsheets, you’re potentially wasting hundreds or even thousands of man hours and thousands of dollars," Haley says. "Automated systems can not only save time and money (and both have a quantifiable monetary value), but just having your data backed up on a regular basis or automatically filing government reports can eliminate expensive data recovery costs or fines. If you keep all of your rental info on an old office computer, what happens if it gets stolen? Will you know who has your assets and if they’ve paid? These are things that aren’t nearly as quantifiable but still have inherent costs."
He continues, "Having a system that puts your data to work for you is like having a full-time employee on staff without incurring any of the costs. The sophistication that automated business alerts and workflows bring to a business helps leaders make proactive business decisions based on business intelligence and proactive data monitoring. We see our customers create workflows for everything from alerting the CEO when a sales rep applies too many discounts to automating AP & AR or distributing reports. The main savings with alerts and workflow is time."
For its part, Orion Software developed a unique e-commerce solution for rental asset management that allows rental companies to not only offer their rental and sales items but also to take over the management of their customer's assets. "It radically increases revenues and changes the relationship with their customers," explains Patrice Boivin at Orion. "It empowers their customers to control their requirements. They don't have to worry about where the equipment is and how to get it delivered. They simply go to a web cart to order, resolve conflicts and specify the shipping location. The back office gets the orders in real-time, users are alerted of changes or new orders coming in. In short, it's a game changing tool."
He continues, "Sirius e is so simple and intuitive to use that rental companies save on training their staff and increase personal retention. The savings on staff turnover is particularly important in peak periods. You can also keep the best employees with you and recruit the most competent ones who are looking for a good environment."
A more sophisticated rental management system should have some kind of asset management functionality, especially for a business with multiple locations or warehouses. It’s incredibly important to know if you have the right assets in the right locations to make sales more efficient and to reduce time/cost associated delivery, says Haley. "Another really important, often over looked feature by smaller companies is Fixed Asset Management. You pay taxes on your equipment, so it’s important to understand depreciation to make sure you’re not over paying each year. This is a direct way you can start saving money."
Rental systems can also help create accurate sales quotes by knowing where your equipment is located, and they give you the ability to know if you have the right equipment in the right location.
Purchasing modules are another valuable feature. "Many companies rely on a 'pay-as-you-go' strategy when purchasing equipment, parts or resale items, and usually it's without regard to stock levels, cost or need," Levron says. "A purchasing module brings process and controls to the operating expenses of a company in many areas:
- Approval levels - Who is authorized for how much per transaction?
- Minimum stocking levels - Do we have any of these in our other warehouses?
- Proper allocation of cost for maintenance reporting – Did we purchase that fuel pump for truck 01 or 02?
- Expected cost – the vendor quoted us $99 on the phone. Why is this invoice for $400?
Having a billing system in place helps standardize processes across the entire organization. Without a system in place, every sales person has the ability to issue billing rates on their own, offer discounts that might be unprofitable, or completely miss billings on occasion. Haley says standardizing billing processes can help identify and eliminate "billing leakages." Also being able to tie this information into your cash-flow can make it much more predictable. "Standardization of processes can help you learn how timely and accurate your invoices are in order to make sure you’re always billing the correct rate and that you’re never missing a billing altogether," he says. "This is definitely one of the most common themes seen from ARM customers who formerly used something like Quickbooks and Excel or disparate accounting and rental systems, especially those who issue manual invoices," he says.
Levron agrees, noting that features that eliminate the need to retype rental contracts and delivery ticket data to create an invoice save the users time. Also, the ability to create batches of invoices per customer, branch, rental type, usage period, etc. also save the users time. "Computing rates and extended totals automatically eliminates the need for costly and mistake-prone manual calculations," he says. "It may be that a billing operation that needed two users can accomplish the task with one, freeing the other user for the up-to-now neglected tasks."
A system with mobile workforce management functionality can make better use of existing rental fleet as well as vehicle fleets of trucks and trailers, says Shea. "Enfinity uses a StreetEagle integration to optimize dispatch planning, routing, and pickup and delivery scheduling. It also manages driver accountability, which is a big part of realizing ROI on a mobile workforce. And because better control leads to fewer delivery ‘misses,’ it’s proven to be an effective customer relationship management tool," he says.
Boivin at Orion notes that Sirius e was designed to manage large number of locations in a network of independent businesses sharing their assets with a back office solution and a web cart unique site. "Each branch can share the equipment they choose to offer, request inter-branch transfer from a simple click and offer their customers the most complete offering of rental equipment online. This can increase the e-business revenues and reduce lost opportunities," he says.
Electronic signature capture is another money-saving feature on today's systems. "The rental end-customer base – particularly contractors – is becoming increasingly mobile. This is shifting the rental contract capture out of the store and into venues where business is often conducted on mobile devices," Shea says. "Electronic signature capture has a raft of advantages, including the ability to close a deal on the spot, documented customer acceptance of contract items, prices and terms, and delivery and pickup acceptances, all of which can trickle down to faster payments on account and better cash flow."