Re-Rental Transactions

Re-renting equipment occur when your firm rents equipment from another rental firm, and then your firm rents that equipment out to one of your own customers.
This sub-rental action is useful when the demand for a product such as a generator, exceeds the number of generators your firm has available to fill your customers' orders.

Instead of turning away a customer or sending them to the competition, a re-rental or sub-rental is a way of satisfying a temporary increase in demand for a certain piece of equipment.
If the extra demand for the equipment remains over a period of time, your firm should purchase the additional equipment instead of re-renting.

Generally, when equipment is re-rented or sub-rented from another rental firm, the other firm gives a 20-30% discount on regular rental rates.
This enables renting to your customer at your regular rates, but the gross profit on re-rentals or sub-rentals would only be 20-30%.

Setting Up Re-Rental Equipment:

• PRODUCT CLASS SETUP:
  In Rental Product Classes setup a separate product class for the re-rental equipment, and identify it as a Rerent Class in the Additional Options window of that class.
  If your firm does a lot of re-renting, setup several classes to allow for the separate G/L Accounts, taxes or rental rate structures. Each class must be a Rental class.

  Note: Availability checking for Rental equipment in a Re-rent Product Class does not apply even if that equipment belongs to a Group flagged to require availability checking.

  Defining the G/L Posting Accounts:

  Use the same Rental Inventory, Cost of Goods Sold and Sale of Rental Equipment Accounts as your normal rental equipment.
  This way, if a customer loses or damages the re-rented equipment, it can be sold to him as the equipment has been setup as if it belonged to your firm.

  When the A/P invoice is received for the rerent of the equipment from the other rental firm, it will post into rental inventory.
  Although the equipment is not part of your rental fleet, creating Fixed Asset tags enables any disposal to be cleared and all the proper accounting to occur that result from the sale of the rental equipment.

  For the Rental Revenue account, use the same G/L account for normal rental of the equipment, or setup a separate G/L account to track the rental revenue from re-rented equipment.

  
  Re-Rental Designation:

  Flag the product class as a Re-rental Class in the Additional Options window of the Rental Product Class.
  This means that ALL equipment in this product class is re-rented from another rental firm.

  Each time equipment in this class is rented, a record is written to the Re-Rental Transactions file for the rental revenue.
  When the charges from the other rental firm are recorded against the rental revenue in this program, a complete picture of how often the equipment is being re-rented and how profitable it has been is provided.

  
  Contract/Purchase Order Link for Ordering Re-Rental Equipment:

  To use the option to create an order when the re-rent product is put on a contract, also set the flag to Allow Create P.O. from Contract in the Additional Options window of relevant Rental Product Classes.
  This processing allows re-rent equipment in this class to be ordered from a Contract creating a Purchase Order for the supplier, as outlined in Contract/Purchase Order Link Overview.

  Supporting sales products and sales parts associated with ordering a service must belong to a Sales Product Class that is flagged to Allow Create P.O. from Contract.

  The re-rent order link can also be established when the Purchase Order detail for the re-rental equipment is entered to link the P.O. to a specific Contract.

  
  RE-RENT PRODUCT SETUP:
  Set up the product numbers to be re-rented in either Rental Inventory or by using the Clone Rental & Sales Products utility.
  When selecting a product number for re-rented equipment, some firms like to assign an "R" or "RR" in front of the product number, to easily identify re-rented equipment.
  This helps when doing product inquiries, contract lookups, etc.
  When setting up re-rental products, set the following flags:

  • Set all Costs to zero, since your firm does not own the equipment.
  • Uncheck the Inventory flag since the re-rental equipment should not be included in inventory value reports.
  • Uncheck the Rate Book flag since the item shouldn't appear on your rate books.

Tracking Re-Rental Revenue Automatically:

The new re-rental product # can be used on contracts, invoices etc. in place of the regular product number.

Each time an item from a Product Class that is flagged as a Re-rent class, is rented a record is written for the revenue into the Re-Rental Transactions file when the Daily Close programs are run.

Each time the Daily Close programs are run, any revenue earned from re-rental (sub-rented) equipment is automatically recorded into Re-Rental Transactions.

Note: In order to qualify as re-rental equipment, the product # must be in a Rental Product Class that is flagged as a Re-Rent class.

Tracking the Cost of Re-Renting:

To offset the revenue from re-rentals, the costs of the re-rentals should also be recorded, so that by tracking the number of times an equipment re-rent was required, with the revenue earned and the costs incurred, a decision can be made about re-renting the equipment in the future or purchasing the equipment instead.

Following are three separate approaches to capturing costs:

Capturing Re-rental Costs using A/P Invoices:

A/P Invoices can only be used to capture the costs from the supplier's invoice, if a "Contract/Purchase Order link" was NOT used to originally order the re-rent equipment.
When entering the invoice into Accounts Payable, at the Type field in the details select E for RE-RENTAL and enter the Product #, the Quantity and optional Reference, as outlined in A/P Invoice Details.
This automatically records a Re-Rental Transaction.

Note: To manually designate the equipment as re-rental A/P Invoice by P.O. can not be used as Type E for RE-RENTAL is not an option when the inventory purchases come from a Purchase Order.

Capturing Re-Rental Costs using A/P Invoice by P.O. :

If the re-rent was triggered by generating an order for the re-rent product at the time the Contract was entered, or linking an existing contract to a P.O. when the Purchase Order was entered, then A/P Invoice by P.O. must be used to capture the re-rent costs.
This automatically records a Re-Rental Transaction.

A window is provided on the Purchase Order Inquiry and on the Qty field of the Contract Details to show the P.O./Contract link and re-rental information.

Refer to Contract/Purchase Order Link Overview for details on this feature.

Capturing Re-rental Costs Manually using Re-rental Transaction:

If re-rental costs are not being recorded using either of the above A/P Invoices methods, costs can be entered manually in this Re-Rental Transaction utility instead, as follows:

PRODUCT #

Enter the product number of the re-rented equipment or look it up in the Inventory Search window.

DIVISION

Enter the division or store that re-rented the equipment or select it from the drop-down list.

Re-Rental Details:

Any previous revenue entries which were created when customer invoices were issued are displayed.
Enter the re-rent costs as follows:

SEQ#

The sequence number is automatically assigned to track the records in this table.

DATE

Accept today's date, or type in the date on the A/P invoice from the other rental firm.

VENDOR

Enter the vendor number of the Accounts Payable invoice, or look it up in the Vendor Search window.

NAME

The vendor name is displayed for verification.

A/P INV#

Type in the Accounts Payable invoice number from that vendor.

SALES INV#

This field is skipped and will be automatically maintained when the equipment is rented.

QUANTITY

Enter the quantity re-rented.
i.e. the number of units rented

COST

Enter the total cost of the re-rental.
i.e. the total dollar amount for renting this item from the other rental firm.

REVENUE

This field is skipped and will be automatically maintained when the equipment is rented

Expanded Record

Click the EXP/CON button to view the additional re-rent transaction fields including Reference, Billed dates, Contract number and Purchase Order number.

Finished?

Click ACCEPT Key to exit.

Re-Rental Reporting:

The Re-Rental Inquiry/Report uses these transactions, and can be used to view the metrics and value in re-renting specific equipment versus purchasing and maintaining it.