Industry sector:

Tool hire: Cash sales


'Cash sales' means all income received at the time when you hire equipment to a customer - either when they pick the tool up or when they return the tool. While some of your customers may pay you in cash, remember that Cash sales can also include:

  • debit and credit card payments
  • cheques
  • bank transfers

To prepare your cash flow, you'll need to estimate how much income you'll receive over the next 12 months, including VAT. To do this you'll need to estimate how many items you are likely to hire out and at what price, together with an estimate of how much you will receive from any other services you decide to offer.

There are a number of things to consider when you make your estimates.

Type of business

Think about the type of hire business you intend to run:

  • will you concentrate on private or trade customers or a mixture of both (your target market is likely to influence the types of hire tool and equipment you keep in stock)
  • where will your premises be
  • how big will your premises be (this will affect the range of items you can offer for hire)
  • what will your opening hours be
  • will you offer a delivery and collection service - this may increase the number of potential customers

Your services

As well as a range of tools for building projects and DIY, you might decide to hire out:

  • larger items such as mini diggers
  • plant equipment such as excavators and so on
  • scaffolding, access towers, hoists and cranes
  • gardening equipment
  • trailers
  • generators
  • heating, cooling, air conditioning or dehumidifying equipment
  • portable toilets
  • welfare vehicles - typically large vans equipped with washing, toilet and cooking facilities for use by workforces in remote site locations
  • temporary security fencing

You might also decide to offer repair and servicing of customers' own equipment.

You may well aim to sell your hire customers consumables like grinding and cutting disks, cleaning fluids and safety wear to use with the tools they hire. You might also make a wear charge for certain items to cover inevitable wear and other damage to expensive consumable parts like flails and blades.

Pricing

Give some thought to how you'll set your prices:

  • what will your pricing policy be (you must at least be able to cover your costs, overheads and drawings)
  • how will you cost any other services (for example a delivery and collection service)
  • how often will you review your prices
  • will you offer discounts, special offers and so on

To help with your decisions, click on the checkpoints for guidance. Once you have worked out a Cash sales figure add it to the relevant field in your cash flow forecast.