Cleaning equipment finance

How do contract cleaning companies finance equipment?

Contract cleaning firms typically lease scrubber-driers, ride-on machines and vacuums rather than buy outright, because these contracts are won on price and tying up cash in equipment at exactly the moment a new site is being mobilised puts pressure on margin at the worst possible time. Leasing also suits the equipment itself, since battery and filtration technology moves quickly enough that a machine bought today is a noticeably better proposition to a client in three or four years than the one it is replacing.

Buyers are contract cleaning companies, facilities management firms and hotels or care homes running cleaning in-house rather than through a contractor. Demand for new equipment is usually triggered by winning a new site or contract, which means the equipment has to be funded and in place before the first invoice for that contract is ever paid, putting the business in a cash squeeze at exactly the point it should be growing. Financing rather than buying outright avoids that squeeze and keeps working capital available to mobilise the next contract while the current one is still being paid for.

Leasing or an operating lease suits ride-on and walk-behind scrubber-driers particularly well, because a cleaning contractor often wants its fleet refreshed on a cycle that keeps pace with contract renewals and tender requirements, rather than running machines until they wear out. Hire purchase is a reasonable fit for durable equipment used across many sites over a long period, such as pressure washers or fixed extraction systems, where the business genuinely intends to own and keep using the same unit for years.

Industrial cleaning machines from mainstream manufacturers have a reasonable used market, which helps a contractor secure finance for a fleet expansion without an unusually large deposit. Specialist attachments and consumable-dependent accessories have little resale value of their own, so a lender will generally focus its security on the core machine rather than the extras bundled with it. This is worth bearing in mind when comparing quotes, since two similarly priced machines can attract different terms depending on how much of the price sits in optional attachments rather than the base unit.

The mistake we see most often is matching the finance term to the length of a single contract, on the assumption the machine will not be needed once that contract ends, when in practice a well-maintained scrubber-drier or vacuum is redeployed to the next site rather than scrapped. Financing against the machine's real working life, rather than one contract's length, usually produces a lower monthly cost without leaving the business under-equipped once that contract is renewed or lost.

People also ask