Rental Fleet Internal Charges – What’s Fair?-Rental Fleet Internal Charges

Video Transcription

Video Summary

In this video transcript, Larry Kay discusses the topic of rental fleet internal charges and how they impact profitability in the equipment rental business. He starts off by introducing himself and his background in the equipment rental business. He then explains the different areas of expense and acquisition costs that come with managing a rental fleet, including the cost of equipment, depreciation, interest, parts and service, damages, and disposal costs. <br /><br />Kay also emphasizes the importance of tracking the profitability of the rental department and how it impacts other departments, such as sales and service. He recommends evaluating the internal charges and considering whether they are fair and accurately reflecting the value of the rental department. He suggests considering the speed and service provided by other departments, such as service labor and parts pricing, rather than just focusing on the price. <br /><br />Furthermore, Kay discusses the impact of depreciation and interest costs on the profitability of the rental department. He explains that depreciation is a function of equipment cost and not revenue generated, and illustrates how different depreciation schedules can affect profitability. He also explores the concept of cost of capital and its impact on interest costs.<br /><br />Kay concludes by discussing the importance of accurately accounting for damages and expenses related to the rental fleet, and making informed decisions about the disposal of used equipment. He recommends considering the benefits and costs associated with extended warranties and other factors that could affect profitability.<br /><br />Overall, the video transcript provides insights into the various factors that impact profitability in the equipment rental business and offers recommendations for effectively managing internal charges and maximizing profitability.

Keywords

rental fleet internal charges

profitability

equipment rental business

expense

acquisition costs

depreciation

interest

parts and service

damages

disposal costs