What Is the Meaning of Wear & Tear? (And Ways to Minimize It)

Picture this: Your manufacturing business has been thriving with constant new orders and ironclad processes keeping things moving. But all of a sudden, a key piece of equipment breaks down, bringing your operation to a screeching halt. It turns out that normal wear and tear from a lack of lubrication in a moving part went undetected, resulting in a major failure that could have been prevented had it been caught and addressed. 

Understanding what wear and tear is, how it can negatively affect your business and how to plan for it accordingly is vital to your continued success. Follow along for everything you need to know. 

What Is Wear & Tear?

From a legal perspective, “ordinary” or ‘“natural wear and tear” refers to “damage to property resulting from ordinary use and exposure over time. The term is commonly used in landlord-tenant law to limit the tenant’s liability for damage to the property.” 

Let’s say you work in property management and need your rental property to be move-in ready after a tenant moves. During a move-out inspection, you note that the bedroom door handle is shaky as a result of everyday use — a common example of wear and tear. However, a broken window would be considered property damage, and you would be completely justified to deduct the repair amount from the tenant’s security deposit.

For industries that depend on the reliability of their equipment, wear and tear typically refers to the gradual deterioration or efficiency in a piece of equipment. As machinery ages and experiences continued use, parts get worn down and overall performance declines overtime. In fact, more than 44 percent of machine failures in a recent maintenance study were traced back to wear and tear on aging equipment. Over time, constant stress on parts like gears, joints and bearings that eventually lead to system failure. 

But techniques like proactive maintenance and recurring inspections can alleviate the effect of wear and tear and extend equipment lifespans.

Wear & Tear vs. Damage: What’s the Difference?

Wear and tear is the gradual, normal depreciation of equipment that comes with time and continued use, like the thinning tread of a tire or natural wear of machinery joints. Damage, on the other hand, is harm that occurs beyond what is expected with normal use, due to issues like human error or a tire puncturing after driving over a nail.

Legally, wear and tear commonly falls under routine maintenance and is rarely actionable, while damage can carry liability implications. Understanding the distinctions between these two causes of equipment failure can help businesses to plan for continued upkeep, assign maintenance tasks accordingly and avoid disputes over repair costs or negligence. 

How Does Wear & Tear Affect Asset Value?

Wear and tear has a direct impact on the overall value of your assets, as aging equipment depreciates with continued usage. Accountants calculate and quantify depreciation by estimating an asset’s cost over its estimated lifespan. Year over year, organizations track how normal use and wear impact the overall value of the asset to ensure that business financials accurately represent the equipment’s current value. 

Two common ways that depreciation is calculated include straight line and double declining balance. 

What Is Straight-Line Depreciation? 

With this technique, an asset’s cost is evenly divided throughout its entire lifespan. For example, a $100,000 machine with a 10-year lifespan declines in value by $10,000 every year (assuming standard usage, no damage and negligible salvage value). 

Accountants commonly use this method for its straightforward calculation and to maintain consistent annual expenses.  

What Is Double-Declining Balance?

This approach to depreciation uses an accelerated approach. In the earlier years of the equipment’s lifespan, a higher portion of the asset value is depreciated when signs of wear and tear tend to be more significant. This means write-offs are larger in the earlier years of the equipment’s lifespan and lower towards the end. 

Accountants use this method to give businesses earlier tax advantages while better representing the true value of the equipment based on usage.

What’s the Right Depreciation Method to Use?

Of course, there’s no right or wrong way to account for asset depreciation; it comes down to your business’ approach to finances, the equipment at hand and your tax strategy.

For assets that get used at a consistent rate throughout their useful life, straight line depreciation may make more sense. If you plan to front load use of the equipment in early years, recognizing that wear will occur more quickly could indicate that the double-declining balance method is right for you. 

Factors That Affect Wear & Tear

The amount your equipment is used has a direct correlation with the amount of wear and tear you can expect. Common causes of wear and tear include:

• Frequency of use: The more often you use the equipment, the faster it will become worn down. 
• Material quality: High-grade materials are likely to last longer without getting worn out compared to cheaper, low-grade materials. 
• Operational environment: Exposure to heat, moisture or corrosive substances can make materials deteriorate faster. 
• Staff training: Machine operators need to abide by best practices to ensure they aren’t putting incessant strain on equipment that can worsen wear and tear. 
• Maintenance practices: Routine maintenance can catch and address minor issues like worn parts and lack of lubrication before they turn into more major problems to mitigate wear and tear and extend equipment lifespans.  

How to Reduce Wear & Tear

Taking the proper steps to care for your machinery can extend its lifespan and prevent costly breakdowns and downtime. Best practices for reducing equipment wear and tear include:

Proper Usage

Following recommended processes and procedures from the manufacturer and training your staff accordingly will prevent undue strain and prevent premature component failure. 

Lubrication

Proper lubrication reduces heat generation and reduces friction by creating a protective film between moving parts, preventing metal-on-metal contact while slowing down surface wear and tear. Schedule lubrication as a key component of your routine maintenance using high-quality lubricants to maintain optimal performance longer. 

Part Replacement

Replacing worn down, aging or defective parts ensures that they don’t jeopardize the performance of the entire system. This proactive maintenance technique minimizes strain on overall components to reduce wear and tear and promotes optimal efficiency by preventing larger breakdowns and downtime.

Regular Maintenance

Consistently inspecting, repairing and maintaining equipment ensures that small problems are addressed before they turn into major ones, preventing excessive stress on vital components. You can incorporate routine tasks such as lubrication, cleaning and part replacements into your maintenance schedule to slow down wear and tear.

How a CMMS Can Help 

A computerized maintenance management system (CMMS) like Coast makes it much easier to prevent excessive wear and tear on your equipment. Here are a few key ways it does this:

• Provides real-time tracking that flags abnormal equipment readings so that technicians can identify potential issues before they worsen
• Schedules routine maintenance, inspections and repairs with simple digital work orders
• Manages parts inventory to ensure you always have spare parts on hand 
• Offers a central location for technicians to record data on equipment wear and tear that is automatically pulled into maintenance reports for better decision-making 

Get started with Coast for free to centralize your maintenance data, automate work orders and better maintain your machinery.