BlogSME Finance

Working with over 200 Accounting Firms across the Nation means the Team at Finance House Group gets presented with many scenarios from Partners looking for help for their SME clients. From Start-Ups to long-established family businesses, the challenges are often the same. In today’s blog, we look at the growth and the problems that can often be associated with the same.

This year has been one like no other. 2020 has seen bushfires on the Eastern Sea Board, Flash Flooding, and a Global Pandemic, all at a time when our Interest Rate has never been lower. Banks are fighting for business, but it needs to be the right business for them (and yes, they are all somewhat different). That’s where a good Broker can help your client get the deal set at the right terms and get it settled.

At Finance House Group, most of our clients are SME’s and we understand there can often be more than one lender to solve the clients’ needs. For example, a recent transaction we helped with ended up needing a “cocktail of lenders” rather than placing it all at one bank. Why? A mixture of risk, product, and rate meant that to help a local plumbing business we needed more than one option. The scenario was simple. The business needed working capital to grow.

So how did the Finance House Group find the best way for this specific client?

  1. We refinanced the client’s family home to a different lender who allowed cash out to the level required (difficult as many have restricted this during COVID-19). This was also at a lower interest rate than the client was paying.
  2. We could then use some of the funds to purchase the equipment the client needed to facilitate the new contract, which was the “growth challenge”. In this instance, we needed 3-way cash flow forecasts to show the equipment finance lender and invoice finance lender how the business would grow and repay the facilities (which the Accountant provided). Finance House Group also provided other options to the client and Accountant on the total cost of finalizing the transaction and importantly, the time frames the client needed the transaction funded by.
  3. With the remaining funds, the client had enough to cover the immediate wages costs.
  4. Lastly, we organized an invoice finance facility to cover the first few invoices, which was enough to get the cash flow working through the business.

In summary, there were several ways to carry out the above transaction. Where Finance House Group is different from other Brokers is that we work with you to find the best unique solution for each client.

If you have client scenarios, you’d like to discuss with Finance House Group or would like a conversation about creating a turnkey finance division, please contact our General Manager Lee Davidson at 0498 010708 or leedavidson@fhg.net.au

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