Compressed Gas Cylinder Rental Options
Industry News
Gas cylinder rentals, what are my options?
Daily, monthly or annual rentals which is best?
Rent free of course! Bust realistically these deals are like unicorns. So, what Is best? Firstly, let’s look at what they cover.
What does my rent actually cover?
Every company will tell you different things, however what the rent is supposed to cover is the cylinder you use.
The rent pays the retesting costs, cylinder aesthetics, cylinder maintenance and making sure that when you turn that valve on a cylinder it doesn’t go pop. Further it provides income to develop new cylinder packages.
Ever wondered why there are new packages in the market such as higher 300 bar cylinders, cylinders with integrated regulators or cylinders with contents gauges on them? It comes from your rent.
Now not every gas supplier uses rental income for the new cylinder packages, they simply see it as another revenue stream. The basic premise is that it covers the retest cost of the cylinder which occurs every 10 years or so depending on the gas.
So which is better daily, monthly or annual rentals?
Each rental option has its benefits, but it really is down to your business to decide what best fits your needs. Looking at each rental option in detail:
Daily rentals
These are exactly that, you get charged a fee for the number of days a cylinder stays on your site for. This fee does increase after 30 days and 60 days and is offered mainly by Air Products.
- Pros
- Really flexible and great if you are on a budget and expect to use the gas within a short period of time < 30 days.
- For this form of rental to benefit your company you will need a strict first in first out process. If you use multiple cylinders a record will need to be created so that each cylinder barcode number is recorded so that they can be tracked. This will help with your stock rotation and avoid increased rentals fees.
- Cons
- Who wants to manage cylinders by reading a barcode? Also do you have time to check which cylinder is oldest when your team is in the middle of an important job?
- The cost to implement this will cost you in terms of extra time handling cylinders- less time being productive.
- What tends to happen is the cylinder at the back gets quietly forgotten paying high daily rentals, while the cylinders at the front keeps getting rotated. Last in First Out.
- Further like most companies, you have cylinders that has been on site for months. Think purging or special gases you seldom use. Most likely this has been ordered months ago for a special process costing you a small fortune in rentals.
Monthly rentals
This is by far the most common form of rentals offered by gas suppliers and to be honest the most practical.
- Pros
- Quite flexible as you can increase or decrease your cylinder holdings as and when you need to.
- It’s a flat fee so regardless how long you have stored cylinders on site the price is fixed (until a price review).
- Monthly rentals are easier to manage as it’s a physical count every month (if you carry out a stock take) to confirm what’ has actually been charged for.
- Cons
- Timing is important here if you are a stable user and the gas cylinder is always used on a full for empty basis, you have no worries. However if you use a gas cylinder in a short space of time and not going to reorder or you’re overstocked for 1 week you will be charged rental for those cylinder for the whole month! Even if you have had the cylinder for an extra day or two into a new month.
- Price, is always an issue here as monthly rentals can be quite high. Unless your prepared to negotiate you will pay a high price. Further, certain special gas products may have higher monthly rentals. The gas is more expensive and so is the rental – be wary.
Annual rentals
Annual rentals can be beneficial if you are a stable user of gas. Also, as you are paying for the rentals up front it will clearly indicate to your company whether you spend more on rentals or the actual gas you purchased, simply by the size of the payment. Saves you splitting the bill every month an counting.
- Pros
- If your gas requirements are mainly air gases e.g. nitrogen, O2 and argon/ mixtures and your usage is quite stable this could be an option for your company.
- Typically, a discount is applied to annual rentals and there are no ongoing “costs” as you have paid for it upfront.
- Cons
- If your gas usage changes or flexes to cope with your workloads and projects, this may not be a great option as the paperwork trail to keep on top will prove difficult.
- Further your business is likely to incur additional sporadic annual rental charges impacting cash flow, if more or different cylinders types are ordered above your basic holdings.
- Any cylinder holdings changes will create additional paperwork for your accounts team to ensure the associated credit notes are received for unused ‘months’.
Summary
Monthly rentals would be our favoured option as it’s an order and forget model. The main issue here is price and getting a cheaper monthly fee. This is where Price Check Gases can help and advice your company on what prices are currently charged. So, when you negotiate you know exactly what target price you can achieve. Contact us today.
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