No More Blurred Lines Between Rental Accessories & Equipment

The Shepherd’s NetSuite-native EAM Rental module offers rental managers and their CFOs new insights about their costs and overheads by allowing them to catalog and track both rental equipment and rental accessories. A classic example being the relationship of a rental car (the equipment, and an asset), and a roof rack (the accessory, and part of inventory) on the same contract. 

The Importance of Differentiating Costs

Even if companies only rent out accessories and not equipment, the difference between the two in terms of a company’s finances is important. Many ERP systems lack the refinement needed to make that distinction—after all, you’re renting out a car and you’re renting out a roof rack, so what’s the confusion, right? Here the distinction made above about how one is an asset and the other inventory comes into play.

The problem is that you might want to sell the rental car (the asset) at some future point in order to renew your fleet, yet still recoup some of the initial costs. In other words, you need to calculate depreciation and resale value in order to make good cost-return decisions about when fleet renewal is best. The same calculation does not apply to a roof rack (inventory). The resale value is unlikely to change whether it is one year old or three. And even if it did, the revenue of reselling it would not justify the costs of the actual sale. 

Therefore, while the renter just sees two items they are renting, the owner is obliged to treat them differently. Shepherd allows for that contrast. That, in turn, allows for greater accuracy in cost projections for the company. One roof rack may not cause an upset in how things are tracked, but multiply that across a fleet, and add the GPS units, or snow chains to the mix and it can soon add up.

Optimizing Inventory as well as Invoicing Rules

In practical terms for the rental manager, keeping accessories and equipment partitioned can help keep a better overview of what is available and what is not. It also means that resulting reports can help with inventory planning, highlighting if the manager has too many or too few of a given item in order to meet the demand of the rental customers—present and future.

It might also help with contractual considerations. A company may decide to charge a given rate for their equipment but to group all accessories as included in the cost. If there were no distinction in how accessories and equipment were categorized, the rental manager would have to painstakingly remove what are actually accessories from an invoice rather than having the system do it for them.

In terms of the information it makes available, this aspect of Shepherd’s expanded rental functionality does for the rental manager what Time & Material tracking does for the service manager: a clear idea of how much of one or the other has been used and the ability to apply differing invoicing rules as appropriate. As is often the case for Shepherd users, aside from time-saving in certain situations, one of the overarching benefits is increased accuracy and the confidence that goes with it.

Such a service that allows the user to say, down to the individual unit, exactly what is the cost, revenue, and availability per item, whether asset or inventory, will inherently give the user greater confidence to make informed decisions. This is surely a welcome bonus on top of the vast practical implications of the Shepherd EAM solution. Request a demo to learn more.