Future-proof your business

This kind of finance solution offers the chance for SMEs to agree to a contract under which they can use a selected asset or piece of equipment for an agreed period, making a series of repayments to a lender.

The benefits are enormous. For one, asset and equipment finance allows the flexibility of being able to select the terms and scheduling of repayments that best suit the client’s cash flow.

This in turn ensures businesses are able to budget and forecast cash flow more accurately, since the contract is drawn up for an agreed period.

In addition, provided the asset is used to generate assessable income, it could be tax-deductible, delivering a favourable result for the client.

The opportunity within

One broker who has seen the benefits of incorporating asset and equipment finance into his business is Club Financial Services director Kerry Cleanthous.

Mr Cleanthous says this addition to his offering through a partnership with Mildura Finance has helped meet client demand and, as a result, has increased his firm’s revenue.

“Our clients love the fact that they can rely on us to coordinate their asset and equipment finance,” he says. “We already have a great understanding of their circumstances and it saves them having to rehash their entire life story to another party.”

Mr Cleanthous notes that Club Financial Services settles around five to 10 asset and equipment finance transactions a month and he has hopes of increasing this to 15 to 20 per month in the coming year.

“It’s opened the door to opportunities with younger clients, being the children of our existing client base, who will ultimately become our next wave of home loan clients,” he says.

“Having positively experienced our services for their [asset and equipment finance needs], we have no doubt that they will look to us for assistance with their property finance.”

Champika Herath of CLN Home Loans is another broker who praises the opportunities of asset and equipment finance.

Mr Herath has been offering the solution to his clients for nearly two years through the help of his BDM. The competitive rates and quick turnaround times are, he believes, simply the icing on the cake.

“There’s good cross-selling opportunities. Mainly I do residential loans but sometimes clients need asset finance and I can provide that too,” Mr Herath says.

“For new clients who need asset finance, it becomes a good opportunity to get them into my book for other things.”

The major league

“By expanding their portfolio of offerings to include asset and equipment finance, brokers can significantly enhance their bottom line and grow their book by appealing to even more clients,” NAB’s head of commercial broking, Chris Thomas, says.

The major bank has integral asset and equipment finance options available to brokers as part of its wider commercial finance offering, which Mr Thomas notes are flexible to “ensure brokers can meet the differing needs of business owners”.

“Our main equipment finance options are equipment loans, finance leases and hire purchases,” he says.

“We offer a $0 deposit with no capital outlay. This means equipment finance is a practical way for businesses to acquire the capital equipment, cars or IT that they need to run their business without significant up-front costs.

“We also offer tailored repayments which help business owners smooth out capital outlay over a period of time. Predictable monthly repayments suit some businesses, whereas seasonal businesses will need the flexibility to pay different amounts in their peak and quiet times.”

These options, according to Mr Thomas, mean brokers can really get to know their customer’s business and develop an option that is catered specifically to them.

Meanwhile, FAST chief executive Brendan Wright says the aggregation group can also support brokers looking to diversify into asset and equipment finance.

“FAST has always been known as the aggregator that has brokers who do things like business lending, commercial funding and asset finance, and what we’re doing is creating awareness of that within the industry,” he says.

“We have a referral model/hub called FAST Asset Finance, where brokers who know they want to meet this need for their client but don’t want to write it themselves can refer it to a hub of ours where we’ll do it for them. What that means is they get to look after their client, the client gets their needs met and the broker gets to protect their client [retention] as well.”

Electronic lodgements

ANZ’s commercial offering is preparing to launch NextGen.Net’s ApplyOnline and supporting documents electronic lodgement service.

The major bank said its commitment to brokers is the primary reason behind the move to electronic lodgement, which is being spearheaded by ANZ’s general manager of commercial origination, Cosi De Angelis.

“I’ve been aware for some time that we need to make submitting transactions to ANZ easier and more streamlined for our commercial brokers,” Mr De Angelis says.

“Brokers hate double and triple-keying transactions, and they don’t like the fact that lenders have their own unique systems, given they have to deal with so many different lenders.

“I thought [that] it has to be a simple process to use data they’ve submitted in a home loan - data they already have in their own CRM systems - in a commercial or an asset finance application.”

NextGen.Net sales executive Greg Phillips said the group is widely acknowledged as the industry standard for electronic lodgement in residential and third-party distribution through the broker channel.

“The same principles in ApplyOnline apply across multiple broking channels, and while we’ve been in this [commercial] space for some time, it’s great that ApplyOnline is being taken up by a key player such as ANZ,” he says.

“Traditionally, car leasing has been a paper-based operation. ANZ Commercial’s commitment to provide a best-in-class solution for its broker channel through ApplyOnline will provide a sophistication and efficiency to the application lodgement process.”

The solution will expedite application processing, which will reduce the lender’s operational costs, facilitate sales volumes and leverage technology to attain a competitive advantage for brokers, Mr Phillips added.

Mr De Angelis, meanwhile, said his primary focus is achieving a faster turnaround time for brokers.

“Brokers have to deliver a value proposition to their customer, and if I can help them do that by having a seamless process that gets them an approval in market-leading speed, that will sit well with the broker space,” he said.

Brokers will be able to connect to ApplyOnline via their aggregator’s platform.

The basic ApplyOnline functionality is electronic lodgement, Mr Phillips says, but ANZ will also be implementing the supporting documents service and building in a ‘Serviceability (Quote) Calculator’.

“So it’s a comprehensive service which will enable brokers to efficiently fast-track their work and avoid previously time-wasting processes,” he says.

The future

In an increasingly competitive marketplace, being able to provide a more diverse offering to clients will help future-proof a broker’s business in the years to come.

This is why asset and equipment finance needs to be considered as an option, according to Mr Wright.

“Regardless of the industry or nature of the business, there is always an opportunity for a broker to meet an asset finance need of a self-employed client,” he says.

“Even the ones that have really strong cash flows are looking to leverage their balance sheets more, so instead of using their cash to buy an asset for their business [they are looking to] fund it and use that cash for other things.”

NAB’s Mr Thomas says brokers who offer asset and equipment finance will always be relevant, as clients look to continuously revamp their business over the years.

“The ability for brokers to provide alternative solutions, specialist tailored repayments and expert advice means they will stand out to a range of clients,” he says.

“It is especially rewarding to help clients upgrade and modernise their businesses in a way that doesn’t tie up their cash reserves, and lets the business owner reinvest their money back in their business – where it belongs.”