With rates rising again, brokers should be reaching out to their commercial clients, according to a panel of commercial finance specialists.
Brokers are being told they need to be proactive regarding helping their clients, particularly in light of the most recent rate rise last week (7 November).
At the Commercial Finance Insights webinar yesterday (13 November), brokers in the commercial space were urged by the panel of speakers to reach out to their clients and help them return to the “new normal”, in light of the most recent rate rise.
The panel consisted of:
- Scott Mason, general manager commercial, property services and decisioning at Equifax.
- Matthew Porch, head of distribution at Aquamore Finance.
- Kristian Mccausland, sales director at Shift.
- Melanie Davis, chief executive at Fortress Fempire and managing director at Australian Credit Centre.
Speaking at the webinar, Ms Davis told brokers that to “maximise whatever opportunities are there” they should conduct a review of the existing client database.
“Don’t bother going out to get new people, go and actually tackle what you have and get the referrals from there,” she stated.
“The more you know about your clients, the greater their experiences and the greater the opportunities are for you.”
She emphasised that it was important for brokers to understand their clients, especially in the turbulent economic times, and not just shift them to a lender that says they have the “quickest turnaround”, but instead “think very carefully, on behalf of our client, it is our responsibility to ensure that we’re putting them into the right products”.
Ms Davis commented: “I’m seeing massive problems in that area where unfortunately people haven’t known what options are available and they’re putting people into the wrong products.
“Be very very diligent with your clients because without them you don’t actually make any money as a broker. It’s very simple. So please integrate yourself into those businesses so you can plan for what they need before they tell you.”
Mr Mccausland agreed and added that “serving value to your customer is more than just waiting for the phone to ring, being proactive to the customer and understanding what’s in the market that can actually support your customer in need”.
He added that being reactive to situations your clients face can actually “create problems for the customer down the track” and stated that brokers who are close to their clients and understand their business can deliver “outcomes much better than the broker that’s waiting for the phone to ring”.
As rates continue to be the predominant factor for businesses when looking to borrow, Mr Porch warned brokers and their clients to be aware of new lenders that seemingly pop up from nowhere with “cracking headline interest rates”.
Mr Porch stated: “I think you need to understand your clients’ requirements, you need to understand who it is that you’re dealing with, you need to understand where that money is going to come from.
“There’s a lot of these cracking interest rates that are coming up with lenders you never heard of and you don’t know whose money it is, you don’t know what the terms are and we get a lot of clients that say we’ve been offered this and been offered that but then wait five weeks for a letter of offer, what’s your clients’ time worth?”
Business numbers stagnate amid difficult economic climate
As businesses are relying on brokers to help them through the challenging economic climate, Equifax found that the overall annual change in business numbers was reaching almost a flatline, slightly positive at 0.5 per cent.
Mr Mason said it was “the first time that it’s been that low for a very long time”, as even during COVID-19, the net number of businesses was growing in terms of entities.
He stated that the rate being almost flat “means that people are either getting to the point where interest rates or other things are getting higher such that they just don’t want to be in business anymore”, emphasising the importance of a proactive approach from brokers.
Becoming comfortable with the ‘new normal’
The credit bureau’s data revealed that asset finance increased by 5.2 per cent compared to the same time last year, while business loan applications decreased by 8.8 per cent over the same period.
Ms Davis believed that business loan numbers would continue to decrease as people running businesses become more cautious; “they’re not trying to sort of do these quick loans”, with many understanding the “new normal” before last week’s rate rise.
She added: “I think it will continue to trend down because prior to that [Melbourne Cup rate rise], I think people have accepted that the high interest rates were the new normal and it takes a little bit of time for people to get their heads around that.”
Looking ahead, Ms Davis said she expected the start of 2024 to be “quite slow”, but believed there will be growth.
“I think that the new normal has to sit back in again, these are our rates, these are our situations and it’s time to push forward,” she stated.