EOFY an opportunity to strengthen SME business, says aggregator
The end of the financial year is a crucial time for asset finance brokers, who are being urged to strike while the iron is hot as a recent poll revealed 60% of brokers are confident in their business growth in the second half of 2024.
Aggregator Connective Asset Finance, which held the webinar poll, urged brokers to strengthen client relationships by talking about financing for business solutions beyond rates, laying the groundwork for future success.
It said the EOFY was an opportunity for asset finance brokers to engage more with their SME clients about tax optimisation, leverage existing measures this financial year to meet deadlines and strategic financial management to improve their business’ overall financial position.
Connective Asset Finance has 431 member brokers who exclusively write asset finance loans.
Instant asset write-off extended
Brent Starrenburg (pictured above), head of Connective Asset Finance, said the extension of the instant asset write-off scheme on assets costing less than $20,000 until June 30, 2025 and confirmed in the recent Federal budget was a welcome short-term boost for small businesses with a turnover of less than $10 million.
He said while the scope of the scheme remained unchanged, the extension offered some relief and opportunities in the current high inflationary environment.
SME growth opportunities
Connective Asset Finance had observed general market optimism despite the budget falling short of further significant and permanent support for SMEs, with the poll showing 60% of brokers were confident of business growth in the second half of 2024.
“Inflation has been the primary hurdle for SMEs, and this will likely persist until interest rates start declining,” Starrenburg said. “For now, businesses are looking to reduce cost bases rather than raise prices - they want to invest in growth.”
He said asset finance brokers had the opportunity to initiate conversations with clients by “simply asking them the growth opportunities they’d like to achieve if their business had access to capital”.
“Think beyond single transactions and showcase your role as a provider of financial solutions – are there any additional products that will fit your clients’ broader business needs and financial position?”
Starrenburg said the asset finance brokers had the chance to outshine car dealerships before the EOFY.
Dealerships often limited loan terms during end-of-year sales, so by promoting lower fees and longer loan terms, brokers could attract customers seeking pre-approval, ensuring better repayment terms and enhanced cash flow for their clients.
New data from the Commonwealth Bank released in May revealed there are plenty of opportunities for asset finance brokers, with a 22% rise in vehicle and equipment financing compared to the same period last year.
CBA’s report showed a trend towards greener assets, with electric vehicle fleets experiencing a threefold increase of 325% and hybrid vehicles rising by 120%.
Manufacturers had also ramped up their investments, with a 24% increase in funding for manufacturing and industrial equipment, including manufacturing lines, forklifts, and scissor lifts.
Three top tips for asset finance brokers
Starrenburg said there were three key actions brokers could undertake:
- Secure competitive rates
- Find the right product and lender
- Make the application process seamless
“Now is the time to solidify client relationships and educate on the value proposition of using a broker, beyond securing the best deal and expand to risk mitigation,” Starrenburg said.
“There’s a trend of clients being more cautious with credit decisions, and in an age of information overload and self-diagnosis, brokers need to demonstrate their expertise.”
Building client relationships
Starrenburg said Connective Asset Finance also encouraged its members to think beyond the EOFY and engage with clients about upcoming financial year plans, which required putting extra effort into building relationships with clients.
“The most successful brokers are those that proactively reach out to clients in their existing book, whether via email or phone, and ask if there are other ways they can support them.
“These are the brokers who put in the time to understand their client’s short-, mid- and long-term goals and not treat it as transactional activity. Utilise tools and maintain an effective CRM system to identify opportunities and monitor client activity.”
Tech transformation
Starrenburg said advancements in technology and AI were transforming the asset finance industry, with automation speeding up loan approvals, as real-time systems enabled a smoother process.
“Meanwhile, AI is emerging as a valuable tool and should not be seen as a replacement for brokers, rather, a partner that can automate tasks and enhance efficiency,” he said.
SMEs used asset finance brokers because of their expertise and strong relationships, so brokers needed to continue fostering those relationships.
“The opportunity lies in creating awareness within clients and streamlining operations to improve client satisfaction. Embracing technology is key to maximising brokers’ impact, fostering repeat business and referrals,” Starrenburg said.
Asset finance growth
Connective has enjoyed strong growth in asset finance, with asset finance broker membership growing 34% in calendar year 2023 and asset finance settlements reaching $3.95 billion, 18% growth year-on-year.
Azora, Salt & Lime, Grenke, AlexBank, Moneytech, and Moneyme Autopay were also added to Connective’s lender panel.
Connective CEO Glen Lees said combined with innovative technology advancements coming soon, it expected to see the same strong growth in 2024.
