Renting Pumps or Running Businesses, the Trend is Toward Opex

Renting Pumps or Running Businesses, the Trend is Toward Opex

It doesn't take an accounting degree to know when it's the right time to rent a pump versus buying one. Even if you don't know Capex from Opex from FedEx, you know it makes sense to pay only for the equipment and services you need, when you need them, for as long as you need them.

If you are buying a pump for the long term to create a future benefit for your business, it's a capital expenditure – Capex – just like buildings, machinery or other permanent equipment. You pay all the money up-front, and get the value back in a trickle over the next several years as the pump asset depreciates.

If you are renting it for a limited amount of time – for a temporary project or sudden emergency - it's an operational expenditure, or Opex, just like utilities, maintenance and repairs.  It's a pay-as-you-go proposition:  you make your payments by the month, and you get the value back in the same time frame.

Renting pumps allows you to be prepared with the latest equipment without a Capex investment. An article in Impeller Magazine put it this way:  "It [Renting] enables cities to contract for emergency, build resilience through smart preparation and ensure speedy action on the ground with access to thousands of rental assets across the globe. In this way, cities can avoid massive capital expenditure while securing vital flood control services in times of crisis." 

Another recent article by an information technology company went into more detail on why Opex might be the right choice for you:  "One reason for this transition to Opex investments is the rapid changes in technology. It doesn't make sense to sink money into equipment that's surpassed by the very next model."

This is as true in the pumping world as it is in the technology space. Renting pumps gives you the opportunity to deal with an immediate issue and test new methods of technology without incurring long-term Capex costs. It also allows you to minimize maintenance and parts costs and eliminates the need to manage or store auxiliary equipment.

With Xylem, you can scale up your existing pump fleet and rent best-in-class pumping equipment without making unnecessary Capex investments. There are times when buying makes more sense, but it's important to know that pump rental is very often a viable option and that going the Opex route can generate value for your company. 

by Michael J. Delzingaro