Check the cost of hiring a replacement before surrendering equipment
Assess practical hire alternatives and job dependencies before deciding about equipment under finance arrears.
Corporate Recovery Partners
01 / 06
An alternative machine may not be available tomorrow
Equipment repayments are overdue and you are considering returning the asset. Obtain advice about the finance agreement and remaining obligations before acting. At the same time, test the practical alternative for current jobs. A general belief that another machine can be hired does not establish its availability, suitability or total cost when the work needs it.
Imagine an earthworks contractor relying on a particular excavator and attachment. Ask hire providers about the actual capacity, attachment compatibility, location and dates. Record quoted terms and availability. A cheaper machine of a different size may not perform the contracted work. Do not compare only a daily headline rate with the existing monthly finance payment.
business.gov.au's cash-flow guidance includes the costs required to operate the business and their payment timing. Add deposits, transport, fuel and other relevant hire costs to the alternative scenario. Label unconfirmed figures. A replacement arrangement may require substantial money upfront even if its longer-term cost appears lower on paper.
Identify jobs affected by delivery timing, operator requirements or reduced output. Discuss contractual changes with appropriate advice rather than promising the customer the same programme automatically. In the earthworks example, moving a different machine between sites may create extra downtime. That practical cost belongs in the assessment alongside the hire invoice.
Ask the financier and adviser what surrender, sale or another option would mean under the actual agreement. Do not assume returning the machine clears the debt or that a hire quote establishes permission to dispose of it. The financial and operational comparisons need to be understood together, with unresolved liabilities clearly shown.
Record which alternative is genuinely available, its conditions and the effect on the work. Give the adviser the comparison before committing. If no affordable arrangement exists, address the wider business position promptly. A realistic replacement assessment can prevent an equipment decision from creating an immediate delivery failure as well as a continuing finance problem.
