As the end of financial year fast approaches, several leading players in the asset finance space have outlined their top tips for brokers looking to write more asset finance deals.
This Sunday (30 June) marks the end of the financial year 2018-19 and many small businesses will be reviewing their finances, looking at their tax write-off options and seek to take advantage of the end of financial year (EOFY) sales to buy new cars and machinery.
Speaking on The Adviser Live – EOFY Special: Asset finance in focus webcast, the head of Connective Asset Finance, Brent Starrenburg, noted that while brokers should always be looking to help their SME clients access asset finance, activity particularly “ramps up at this point in time, towards the end of the financial year”.
Mr Starrenburg said that he often sees brokers leave a deal “way too late towards the end of the financial year”, noting that he has previously seen deals placed on 30 June and therefore not get approved in time.
“That throws a massive spanner in the works that upsets the client, obviously, it upsets the broker and it has a massive snowball effect,” he said.
As such, Mr Starrenburg urged brokers to submit their deals ahead of the final day to ensure that they are approved.
Cristian Fedrigo, head of sales and distribution at SME lender GetCapital agreed, stating: “Any time of year is a good time to be talking about asset finance [but] end of financial year, I think, it is a perfect recipe to have a really good conversation with customers”.
He explained: “There are a number of reasons for [talking about asset finance before the end of the tax year]. You have that last-minute tax deduction – and I think that has definitely been fuelled by the instant asset write-off changes of late – and I think it also coincides with end of financial year sales.
“Most motor vehicle dealerships or machinery businesses selling assets usually try and clear their stock levels towards the end of financial year. So from the buy side, you can try and get yourself a bargain, and from the sell side, it really is important to try and strip out your inventory as it does have an impact on your taxable income. So, all in all, I think it is a great recipe for a conversation [this time of year] because there is always a lot happening,” he said.
When asked for their top tips for brokers to write more asset finance deals before EOFY, GetCapital’s Mr Fedrigo recommended: “Firstly, know the business, know the asset, know the industry. So know your customer and make sure you obviously package that deal to get a really quick decision.
“Don’t limit yourself to just a few lenders. The reality is your client’s requirements might not be met through one or two or even three lenders that you are typically in your comfort zone with.
“So have a look at what Connective [or your aggregator] actually offers because ultimately the panel has been designed to cover that broader spectrum – GetCapital, of course, being one.
“Just be careful not to leave things too late. Towards the end of financial year, turnaround times are affected, so if you leave your start too late, it is really important to manage expectations with both lenders and clients leading into that final week.”
Connective Asset Finance’s head agreed, adding that brokers also look to utilise their customer relationship management (CRM) systems more effectively.
He explained: “Brokers should be utilising their CRM, segmenting their database, understanding (through their ‘knowing your client’ requirements) where the[ir clients] sit, what their nuances are, and understanding whether that particular business is going to be more attracted to cash flow finance or a debtor finance product as well as the equipment piece.”
Mr Starrenburg continued: “You should be breaking it down so that when they do actually send out marketing templates and actually tell clients what they do [for them], they are getting the right message out to the right audience.
“Make sure that the particular marketing you do is poignant to that particular time of year – i.e. EOFY, Christmas, etc. At the start of a new year, talking about motor cars – dealers are clearing out the old plate stock, so talk about that – just make sure your message is relevant to that particular audience as well.”
Find out more about writing asset finance deals in The Adviser Live – EOFY Special: Asset finance in focus webcast, an hour-long educational video about writing these deals at this time of year.
You can also find out more about asset finance, and SME finance more generally, in the June edition of The Adviser magazine, out now. A feature from the magazine, focusing on understanding cash flows, is available online.
[Related: Understanding cash flows]