Business Management
How rental management software can add value to your rental store
Fewer errors, better recordkeeping, pay for software investment
By Wayne Harris
When considering whether or not you want to invest in rental software, it’s typical to ask “Why spend the money? What’s the ROI?” The right software can be a very smart investment and there are a few aspects of the ROI question that are easy to measure.
For example, think about some of your basic business mathematics. When your computer and software system are doing the math, the system ensures that rental fees and sales prices are correctly computed – along with overtime charges, taxes and other fees. If you conservatively estimate that an employee is 95 percent error-free, it suggests that a computer calculation can save you 5% on your gross revenue.
As important, consider the ROI delivered when you improve efficiency. Handwriting a contract might not seem to take long, but the processes that may happen afterward are very time consuming. For example, are late charges added on, or do you find it easier to waive them without a computer automatically and accurately adding them onto the bill?
Consider, too, the benefits of having a system that automates billing and helps avoid the time spent manually preparing, filing and retrieving paperwork. Most of today’s rental software systems automate the entire invoicing process with the option of emailing or faxing statements, and rental software systems usually have the ability to integrate with your current accounting software. Monthly statements are time consuming whether you are manually computing or manually entering invoices into an accounting system. How many hours a month are spent on those functions? Multiply those hours by your average wage and add that to your bottom line.
Another key factor for your ROI analysis: Keeping track of the products you rent. This really came to light when my parents purchased rental management software for their rental store in 1986. Within six months, the software determined that items were missing. We were able to follow the audit trail to see when it had last been at the store. After a little more looking, it was determined that an employee had been stealing equipment. The computer was instrumental in determining that the equipment wasn’t just “lost.”
Maintenance, too, can be overlooked, but it only takes one blown engine to figure out that it is costly to miss. The rental software will remind, schedule and keep track of all the maintenance on your equipment. Not only will that save you money in costly repairs, it will also increase your revenue because your items are in good shape and ready to rent.
With just a little effort, you can see how these factors will benefit your profitability and deliver the ROI required for your software investment. But you should also consider your opportunity costs. They are difficult – but important – to measure. Opportunity costs are defined as what you gave up in order to make the choice you made. Some owners and managers may think that a rental management software system won’t save them money because they do the work themselves. But this is where you need to consider the cost of not investing in software. Let’s say as an owner you spend five hours each week keeping up with a manual system. What could you be doing instead? If you spent that extra five hours making sales calls to prospective contractor customers, or following up with current customers, how might that impact your revenue growth and customer retention? You could also invest time in researching equipment, keeping up with other key tasks, training your staff – all of which can help improve profitability.
Rental management software will increase your bottom line in other ways, including website integration, mobile tracking and automated processes. However, if you were simply to add up the increased revenue and decreased expenses from the points above, you’ll likely conclude that investing in a rental management software system is a no-brainer. If, after considering those aspects, you’re still wondering if it will be hard to adapt to an integrated system, that it’s a challenging transition or you don’t know how to budget for and select a system, my advice is to poll your peers. Talk to trusted peers in the industry or search out online forums on the topic. It’s important to be thorough because choosing the wrong rental software can be costly. Armed with advice, statistics and budget analysis, you will be ready to make a solid choice with confidence.
Wayne Harris is the president & CEO of Point-of-Rental Systems
www.point-of-rental.com
Originally published in the May/June 2014 issue of Pro Contractor Rentals. Copyright 2014 Direct Business Media.
PRO CONTRACTOR RENTALS MAGAZINE
Pro Contractor Rentals provides information of value to rental centers who focus time, resources and attention on meeting the demands of construction contractors and other equipment rental customers.
