How to check plant and equipment hire invoices
A hire invoice bills time as well as things: how many items, for how long, at what rate per period. Most mistakes on one are about the time: a hire that kept running after you called it off, a daily rate charged where a weekly one was agreed, or a minimum hire applied more than once.
In short
- A hire line should reconcile: the number of items times the period times the rate per period comes to the line's total.
- Check the rate is per the period you agreed. A weekly rate charged per day changes the total a lot and can look right at a glance.
- The charges usually run until you call the equipment off hire, so get an off-hire number every time and check the last day billed against it.
How a hire line should reconcile
A hire line usually prints the number of items, the period and a rate per period. "4 Adjustable props, 3 weeks, 6.00" with a total of 72.00 is four props for three weeks at 6.00 a prop a week. Check the three figures come to the line's total, and that the rate is per the period you agreed: per day, per week or per month.
items × period × rate = line total4 props × 3 weeks × 6.00 = 72.00The period unit is where it goes wrong. A weekly rate charged per day, or a daily rate charged across a whole month, changes the total a lot and can look right at a glance. Check the period on the invoice against the period in your agreement before you compare prices.
Where a rate is per week or per month, check how a part period is charged. Some suppliers charge it pro rata, some charge a whole period. Your hire agreement or the supplier's terms should say which.
On-hire and off-hire dates
The period billed runs from the on-hire date to the off-hire date. Check the start against the delivery docket and the end against the date you called the equipment off hire.
Off-hire is where money leaks. What stops the charge is usually calling the equipment off hire with the supplier, not leaving it ready for collection. Get an off-hire number or a written confirmation every time, and keep it with the job's records: it's your evidence of when the hire ended.
On a long hire billed monthly, check each invoice's period starts the day after the last one ended, so no day is charged on two invoices.
Minimum hire
Many items carry a minimum hire, such as a day, a weekend or a week. That's fair if it's in your agreement or the supplier's terms. Check it's applied once per hire, not again on each monthly invoice of a long one, and not on top of a hire that already ran longer than the minimum.
The charges around the hire
Hire invoices carry more extra charges than most. For each one, check it's in your agreement and billed on the basis agreed:
- Delivery and pick-up: usually a charge each way. Check you're billed for the trips that happened, and not for a pick-up while the equipment is still on site.
- Damage waiver: usually a percentage of the hire or a charge per day. Check the basis matches what you agreed and that it runs only for the hire period. If you've arranged your own cover for hired equipment, ask the supplier whether the waiver still applies.
- Fuel: if equipment went back with less fuel than it came with, a refuelling charge may be fair. Check the litres and the rate, or the flat fee, against what was agreed.
- Cleaning, damage and lost items: these should come with evidence, such as photos, a damage report or a list of what wasn't returned. Ask for it before you pay.
- Operators on wet hire: the operator's hours are labour. Check them the way you'd check any labour line.
Keep the dockets
Keep the delivery docket, the off-hire confirmation and any damage report with the invoice. On a long hire they're what settles a disagreement about dates. The ATO generally asks businesses to keep their records for five years, and some records for longer.(ATO: Overview of record-keeping rules for business)
How CostCode reads hire lines
When a hire line prints the number of items, a period ("31 days" beside the item, or a figure under a Days column) and a rate per period, CostCode reads it as items × period × rate, but only when exactly one reading of the period reconciles with the line's total. When none does, or more than one could, the line goes to a person rather than being guessed. The free check says how many hire lines it checked this way.
CostCode then compares the rate per period with the hire rate you agreed for that item. A hire line is checked against an agreed hire rate or not at all: an earlier purchase price isn't a rate per day or per week, so with no hire schedule on file the line stays unverified with the reason, never passed. Where a schedule doesn't say what period its rate covers, CostCode doesn't assume one, and what it finds stays with your team.
CostCode doesn't know your on-hire and off-hire dates, so checking the period against your dockets is still yours to do.
Questions
How do I check the hire period on an invoice?
Count from the on-hire date on the delivery docket to the date you called the equipment off hire, and compare that with the period on each line. Then check the number of items times the period times the rate comes to the line's total.
What is an off-hire number?
A reference many hire companies give when you call equipment off hire. It's your record of when the hire ended, so ask for one every time and keep it with the job's records.
Should damage waiver be on every hire invoice?
Only if it's part of your agreement with that supplier. Check the basis, a percentage or a charge per day, matches what you agreed, and ask about it where you didn't expect it.
Does CostCode check off-hire dates?
No. It checks each hire line's arithmetic and its rate per period against your agreed hire rates. The dates are yours to check against your dockets and off-hire confirmations.