When it comes to equipment finance in Australia’s wider civil construction space, Alex Charilaou, Senior Equipment Finance Specialist at Finlease, says many contractors and companies just aren’t aware of the different options and strategies out there.
“When clients focus on a lot of tenders, the financing is always left to the last minute. If the financials aren’t done on time they can really end up with egg on their face,” he says.
“Some of the smaller guys won’t know where to start. The market needs to be educated on what we can do to make it easier.”
Mr. Charilaou says that in preparation for the big spend state and federal governments are embarking on with infrastructure in this year’s Budget, and as the 2017 financial year comes to a close, now is the perfect time to do some simple housekeeping.
As an independent financial broker with 27 years in the market and connections with 20 of the country’s leading lenders in different tiers, Finlease is well placed to lead the discussion on some of the key equipment financing strategies out there.
“We’re one of the very few national independent broker firms in Australia with offices in every state and region, and our expertise lies in understanding our clients’ needs and getting back to them with the best financing options and strategies,” says Mr. Charilaou.
“All of our specialists in the business are ex-financiers or bank company employees with 25 years experience on average.
“We invoice $400 million in equipment finance alone, but we’re a one-stop-shop – not just for equipment financing but cashflow solutions for businesses too.”
Finlease is experienced in the roads and civil construction industry and is a major sponsor and supporter of the Civil Contractors Federation and Australian Asphalt Pavement Association.
The broker firm’s services are on offer to those in the market looking to take advantage of the opportunity to prime their businesses in readiness for growth.
Finlease’s no financials policy, for instance, is an example of staying ahead of the curve when it comes to financing equipment.
“The mainstream lender market offers many products which do not require financial information from the borrower,” says Mr. Charilaou. “Qualifying criteria includes the business being established for at least two years, a clean credit history and the director(s) being a property owner.
“It would be a worthwhile exercise for anyone contemplating purchasing new or used plant and equipment or vehicles and trucks speaking with a reputable finance broker to explore the options which may be available to them.”
He adds that this type of funding is easy, streamlined and helps take the headache of supplying too much information on purchases up to $150,000.
An extension of this policy makes it easy for customers to replace equipment and heavy transport units up to a spend of $500,000.
“This is what the lending market calls Replacement/Upgrade Policy. New and used items up to five years old can be funded with no fuss where the new finance commitment does not exceed 125 per cent of the existing finance commitment.”
Given the large amount of infrastructure projects underway or beginning in 2017 and upcoming budget spends, Finlease are promoting pre-approved lines of credit as a viable option for equipment financing that Mr. Charilaou says some equipment owners just aren’t aware of.
“Pre-approved lines of credit are the key to being primed and ready to take on new work. Good business is all about efficiencies which translate to higher income and maximising profit margins while keeping overheads to an acceptable minimum.
“The process is to ensure they have their financial information ready.”
Mr. Charilaou recommends a number of lines of credit for equipment purchases with more than one lender – what he calls essentially “spread the risk”.
“This gives you great leverage to obtain improved pricing as the financiers will be fighting for a piece of your business,” he says.
“Spreading your finance risk in the market is an efficient tool that will give you greater buying power and putting you in control of your finances.”
“Security is the equipment itself and the director’s guarantee. There is no cost to arrange such pre-approvals which can be held live for six to 12 months.”
Mr. Charilaou says clients can also opt for revolving limits.
“Clients could have limit approved for 12 months. As they spend, that limit reduces, but as they repay that debt, they can redraw more. It’s like having a credit card,” he says.
Mr. Charilaou says there are many strategies out there to dispel any myths around equipment financing and Finlease is on-hand to help contractors and companies organise their financing needs.
“We listen to our clients to get a better understanding of their business – we are there for the long term.”