Construction plant and telehandlers

8 min read read

The buy-versus-hire decision on plant is usually a utilisation calculation dressed up as a cash-flow one. Get the utilisation assumption right and the finance structure tends to follow naturally.

The situation

A new mid-size excavator runs £60,000-£130,000 depending on size and specification; a telehandler £45,000-£90,000. Businesses that have relied on plant hire for one-off jobs but are now seeing a steadier pipeline of contracts face a decision: keep hiring at day or weekly rates that add up quickly on long jobs, or commit to ownership with the utilisation risk that brings if the pipeline slows.

Construction is also more exposed than most sectors to payment terms further up the chain — main contractor payment certificates, retentions, and the knock-on effect of one late-paying client. That makes matching the finance term and payment size to realistic, not best-case, project cash flow particularly important.

What tends to go wrong

• Buying plant on the strength of one large contract, then finding utilisation drops once that contract ends
• Financing over too short a term to keep payments in line with hire-rate savings, when a longer term at a lower payment may suit better
• Not budgeting for attachments, transport and servicing costs on top of the machine price
• Ignoring the option to refinance existing owned plant to release capital for a new machine, instead raising fresh unsecured borrowing

How we would structure it

Hire purchase is the default for plant that will see regular, ongoing use across multiple contracts — you build equity in the machine and can set the term to reflect realistic utilisation rather than a single contract's length. Where a business wants newer plant on a rolling basis without residual value exposure, or the workload is genuinely contract-specific, an operating lease or finance lease can be a better fit. Where cash is needed for working capital rather than a new purchase, refinancing plant already owned outright is often the quickest route to release capital.

What to have ready

• A rough utilisation estimate — days per month the machine would be in use versus hired
• Current project pipeline and typical payment terms from main contractors
• Dealer quote including any attachments needed
• Details of plant already owned, if capital release is of interest

If you're weighing up buying against continuing to hire, run the utilisation numbers past us — we can usually give a straight view on whether ownership stacks up before you commit to a facility.