When seeking finance to acquire new equipment, regardless of the industry sector or the particular business set-up, most operators will be expecting to incur certain costs associated with the loan. The costs of taking on finance to purchase business equipment are generally considered as the interest charges on the loan and the fees and charges of the lender. While variations across the equipment finance market do exist, both of these cost components are standard inclusions in a finance contract. But time can also be a costly factor in securing equipment finance and operators can utilise lender services and resources to significantly reduce that expense.
There are a number of aspects to our time-cost perspective on securing finance which we offer for consideration.
Global supply issues especially around shortage of micro-processors and shipping as well as the pandemic have caused shortages of some equipment in the Australian market. When that equipment is vital to an operation, it needs to be acquired quickly. For businesses to snap up what stock is available, they will be wanting to be prepared to act and that means quickly securing finance.
But the major time cost factor can be incurred when business owners decide to handle the entire process of sourcing and securing equipment finance on their own. While finance company adverts and online offerings present a picture of easy-access loans, there is still a lot of time involved for those that choose to fly solo on this.
- How many hours or days are you willing to spend on sourcing finance?
- What dollar figure in lost production or foregone working hours and income does that represent as a cost to your business?
- How much is all this time adding to the standard costs of the loan?
Efficiency and productivity can be key to business success and that means maximising and optimising income-generating time available. Utilising services and resources to streamline business processes and procedures. And that includes the finance process. Jade Equipment Finance provides the resources and services to assist business owners to cut the time and many other costs associated with equipment finance.
Adding up the Time Costs
So how, why and where is this time going to add up and start costing a business in sourcing finance?
Here’s a few scenarios to consider:-
- Sourcing multiple quotes. Businesses will want to get the cheapest loan and that means getting quotes from a number of different banks and lenders. While ‘quick quotes’ are readily available, there are set processes and procedures required by many lenders to complete business loan applications in order to secure a confirmed quote. To get enough quotes to make an informed comparison, that process may need to be repeated multiple times – clock ticking!
- The pandemic has sadly seen a lot of businesses struggling with many getting through primarily due to Government support packages. This may cause lenders to tighten application processes, not necessarily criteria and eligibility, but take more time in assessing loan applications. When a business goes through that multiple times they have both increased their time-consumption and possibly extended delays in getting approvals and purchasing limited stock equipment.
- Contacting multiple lenders for quotes and waiting for callbacks can take an operator off the site, out of the workshop and away from income-generating activity. A drop in income that can be considered an expense.
- Cutting through the confusion that can arise around the wide range of lenders available can take time. Equipment finance is available through banks and non-bank lenders and sourcing which lender is best suited to your industry can be time-consuming.
- Understanding interest rates can also be time-consuming. The RBA sets the cash rate and then lenders set their rates depending on the markets they operate in. The interest rates for equipment can vary for different industries.
- Differentiating the different finance products to select the one that will deliver the right solutions for your operation. There are four main types of commercial finance products – Chattel Mortgage, Lease, Hire Purchase and Rental. Businesses need to determine which is best suited to deliver the best outcomes for their particular operation.
Now we’ve detailed the problem, we’ll offer a solution.
Solutions to Cut Time and Costs
Business owners can significantly cut the time and costs of securing equipment finance by using a broker-style lender to handle the process. Jade Equipment Finance has accreditation with numerous banks and non-bank lenders including specialists, so we can quickly survey the market and source the cheapest offer to meet the requirements of a particular business.
Our consultants have the expertise to negotiate on those sometimes tricky loan conditions and achieving the loan term and repayment level preferred by our customers. All this time, while we source, negotiate, structure and finalise your finance, you are productively working in your business.
In addition to cutting the time cost of acquiring finance, our services can also cut the interest costs by achieving cheaper interest rates.
There are a number of actions that business operators can do to quicken the process:-
- Calculate repayment estimates using our finance calculator prior to decide how you want your finance structured. This allows you to quickly brief our consultants on your requirements.
- Address any credit rating issues to reduce the follow-up queries from lenders and to enhance prospects of a cheaper interest rate.
- Prepare documents in advance to reduce any delays.
Time can be a significant cost in sourcing finance when the process is done by the business operator. Jade Equipment Finance assists business owners to reduce the time and the costs of securing equipment finance.
Contact Jade Equipment Finance on 1300 000 003 to discuss how we can save you time and costs in securing finance.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
