Who gets the money when selling decommissioned equipment?

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Nate001

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#290485 15-Nov-2021 08:41

Who gets the money when selling client's decommissioned equipment?

I often see on TradeMe and sometimes GZ IT companies/consultants selling old gear pulled from client's setup after upgrades etc. Who gets the proceeds of the sale? I presume the client paid for the gear originally and was not on loan, so therefore its property of the client and they should get the $$?

So GZ, what is best practice? Do they credit the clients account? Or is the sale a bonus for disposing of equipment on behalf of the client and they pocket it?

PeterReader

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#2812993 15-Nov-2021 08:41

Hmmmm. Here we go.

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djtOtago

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#2812996 15-Nov-2021 08:45

In a lot of cases, the client is only leasing the equipment, so never actually own it.

lxsw20

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#2813012 15-Nov-2021 09:42

Is the client paying for the time to prepare for sale/sale? If so then yeah it should go the client. If not then I'd expect the client to just treat it as free disposal.

Handsomedan

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#2813013 15-Nov-2021 09:50

It largely depends on who is selling and why.

As has been stated, a lot of IT gear is leased, so the resellers have often bought job-lots at auction or in a deal with the providers of said lease, to collect and resell the equipment.

In that case, the gear has been paid for a few times over, through the term of the lease (the client has probably rolled over the lease and got new gear at seemingly no additional cost; just a continuation of the lease payments) and the finance company that provided the lease gets a bit of dosh when they on-sell the old gear.

I used to work in the IT leasing game, so have some old but intimate knowledge of how this all works.

There are also markets and contracts that have been established specifically for the older ex-lease gear, which is why you so often see it at the same resellers, time and time again.

As for why you see older gear being flogged here or on TM - sometimes it's just an arrangement between the IT provider and the company - a piece of IT gear depreciates rapidly and effectively owes a company nothing at it's end of useful life. It can quite literally be given away under the right circumstances, but it still has to be prepared for sale, which can be quite labour intensive, hence it's not being given away by the one that hs invested the time and energy to wipe, clean, refurbish and prepare the equipment for its new extended life.

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Scott3

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#2813020 15-Nov-2021 10:28

Depends on what is agreed in the contract.

If the Company was commissioned to install new & dispose old, it is up to them how they dispose the old gear and they can keep any money for sales.

If decommissioned gear is to be left on site, or returned to the lease provider then so be it.

If the company is to prepare for sale, and sell on behalf of the client, then the client would get the benefit of any proceeds.

I used to write works contracts for industrial sites. Had one client get a bit upset (despite them having approved the documents) when they found out that they specified that the contractor would remove the old item (a big stainless steel thing, worth hundreds in scrap value), and dispose of it as they saw fit. I explained that the companies would consider that value when tendered the job. And they explained that their accounting system has fields for purchasing and residual on disposal for asserts, and it is a lot better look for them to put in say $300 at end of life, than to give it away to the contractor. And instructed that the site get the benefit from any scrap metal in future contracts. Spoke to the company that won the tender. After advising the site would honor the contract as written, asked if they considered such value in the bid. Answer was no, and little windfalls like that get used for stuff like afterwork beers for their staff.

eracode

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#2813024 15-Nov-2021 10:39

PeterReader:

Hmmmm. Here we go.

Really, what is the point of this?

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Lias

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#2813025 15-Nov-2021 10:41

My experience is mostly from the "client" end of things, but from what I've seen it varies quite a bit, these are some scenarios I've seen:

Gear is leased, then returned. No $$ to client.
Gear is purchased by the client, client gets gear removed and recycled for free, the removal entity then wipes, recycles/resells etc. Sometimes $$ to client, sometimes not. (seen with both commercial and charitable removal entities)
Gear is purchased by the client, gear is sold to a recycler, client gets billed for removal costs etc then reimbursed a portion of the profits from resale.
Gear is given to staff, staff then recycle/resell/regift.
Gear is sold to staff at nominal cost, staff then recycle/resell.

As for the end user organisations, most of them are just glad to get rid of it without having to pay someone generally. Pretty common outside IT as well, (e.g. if you get a new bed, fridge, etc delivered in my experience they will almost always offer to take the old one away for you)

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Andib

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#2813030 15-Nov-2021 10:44

From my experience at least with bigger companies (when they own assets rather than lease them), when equipment reaches EOL (typically fully depreciated on the books) they get sold to an IT recycler (or IT provider) in bulk and they will typically get paid based on the resale value of the equipment less any processing costs (pickup fees, data erasure, disposable of any equipment that can't be resold).
From that point it's no longer the original companies asset and the recycler can scrap / refurbish / resell as they see fit. From a financial side this is preferred as it is only a single invoice / vendor & it gets rid of the equipment in one go rather than individually managing the sale of multiple low value items.

Edit: Lias beat me to it :)

1101

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#2813698 16-Nov-2021 09:37

Lias:

As for the end user organisations, most of them are just glad to get rid of it without having to pay someone generally.

This is my experience
The hardware is end of life . It has no big value , maybee $100-$150 on trademe . Not worth the effort for the owners / client .
Buy the time its upgraded , its usually old obselete or failing .

But to sell it , The Hard drives still need to be removed & destroyed or securely wiped . Then someone has to test it to make sure its not faulty .
What you sometimes see on trademe , is a few companies selling old crap for stupid prices .

If they had 200 old PC's , then 200 would have some value . A company that size would have the resources to put that up for tender/auction .

Nate001:

Or is the sale a bonus for disposing of equipment on behalf of the client and they pocket it?

To be honest , sometimes yes .
But still need to spend the time preping it for sale . You wouldnt bother if you had heaps of other work to get on with .

trig42

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#2813708 16-Nov-2021 09:59

We've just done this exercise.

We had 200+ PCs greater than 5 years old, plus a whole lot of printers, a few servers and other useless stuff.

We contacted a recycler. They collected them all from us and processed. They paid us half of what they assessed the value was of the stuff they could resell, and provided data destruction certification.

Good for us, we didn't have to dump it, and we got some money (I think for the PCs, we got about $5k). Win-Win IMO.