Plant and Equipment Hire

Plant and equipment hire invoices are a significant AP category for construction, mining, civil works, and events businesses. Common hire items include excavators, cranes, elevated work platforms (EWPs), concrete pumps, generators, compressors, scaffolding, formwork, and temporary power systems. Hire rates are typically agreed in a hire agreement at the start of the engagement, and invoices are generated periodically (weekly or monthly) based on the agreed rate multiplied by the hire period or number of shifts.

The AP processing challenge with plant hire invoices is rate and quantity verification. Unlike a materials purchase where the quantity is confirmed by a goods receipt note, the hire period is confirmed by time records from the site -- how many days (or shifts, or hours) was each piece of equipment on site during the billing period. The AP team needs access to site time records to verify hire invoices before processing. In businesses where the site team does not systematically record plant hire usage, verification is effectively impossible and the AP team must either trust the hire company's records or request daily dockets from the site that may not have been kept.

Wet hire vs dry hire

Plant hire is either wet hire (the hire company provides the equipment with an operator) or dry hire (the equipment only, operated by the hirer's own staff). The distinction matters for coding and for TPAR purposes. Wet hire invoices include both equipment and labour components; if the labour component is separately identified, it may be subject to TPAR reporting as a payment for services. Dry hire invoices are for equipment only and are typically coded to a plant hire or equipment rental account without TPAR implications.

Wet hire invoices from unregistered or sole trader operators also raise the contractor vs employee classification question: if the operator is providing personal labour on a hire basis under the hirer's supervision, the superannuation guarantee obligation may apply to the labour component of the hire fee. This is a nuanced area that is more commonly encountered in small civil works contracting than in large-scale construction, but is worth flagging when the arrangement is first established rather than discovering the super obligation retrospectively.

AASB 16 and longer-term hire arrangements

Under AASB 16 (Leases), which applies to Australian entities with annual reporting obligations, hire arrangements with terms exceeding 12 months (excluding low-value assets) are treated as finance leases on the balance sheet -- a right-of-use asset is recorded alongside a corresponding lease liability, and the hire payments are split between interest expense and principal repayment rather than being expensed as rental costs. AP teams should flag long-term hire agreements for financial controller review to determine whether AASB 16 accounting applies, as the financial statement impact can be material for businesses with significant ongoing plant hire commitments.