Tech Talk: Cashflow is King with First Class Capital and Macarthur Finance and Capital

Name: Tech Talk: Cashflow is King with First Class Capital and Macarthur Finance and Capital
Uploaded: 2022-12-08T08:20:50.000Z
Duration: 1 h 58 min 3 s

Introduction

The speaker introduces the webinar and provides some housekeeping information.

The webinar is about finance and cash flowing business.

Attendees are encouraged to ask questions using the Q&A button.

The speaker introduces himself as Clinton from Tradypad, a mobile technology training organization.

Ray from MacArthur Finance and Capital is also present as a guest speaker.

Housekeeping

The speaker provides more details on how attendees can participate in the interactive webinar.

Attendees should use the Q&A button to ask questions.

Questions will be answered either during or after the webinar.

The speaker encourages attendees to take notes and submit inquiries if they are listening to a recording of the webinar.

Webinar Topic

The speaker discusses what will be covered in the webinar.

The topic of the webinar is finance and its role in business operations and growth.

Technology will also be discussed in relation to finance options available nowadays.

Good Debt vs. Bad Debt

Ray from MacArthur Finance and Capital talks about good debt versus bad debt.

Good debt is productive debt that generates income or increases net worth.

Bad debt is unproductive debt that does not generate income or increase net worth.

Examples of good debt include mortgages, student loans, and business loans for expansion purposes.

Examples of bad debt include credit card debt used for personal expenses or luxury items.

Conclusion

Ray concludes his discussion on good versus bad debt.

It's important to understand the difference between good and bad debt when making financial decisions.

Good debt can help with growth while bad debt can lead to financial struggles.

Stagnated Debt

The speaker discusses how debt can become stagnated and the importance of seeking advice to make it more effective for businesses.

Structuring Debt

Over time, debt can become stagnated.

It is important to structure debt in a way that is smart and effective for businesses.

Seeking advice on how to structure debt can help make it more profitable or tax-deductible.

Getting Advice

Ignoring bad debt won't make it go away. Seek guidance from an accountant to ensure it is tax-effective.

With changes in the finance environment, there are many funding options available. Seek advice on what type of finance suits your business needs.

Changes in Finance Environment

The speakers discuss changes in the finance environment, including new types of finance and regulations.

Regulation Changes

Due to challenges over the years, there have been changes in regulation, including the Royal Commission looking at ways people apply for finance.

Banks may require more information when applying for finance. Seek advice to ensure you get the right type of finance that suits your situation.

New Types of Finance

There are new types of financing available beyond banks such as cash flow lending.

Higher purchases and leasing are not as popular due to changes in tax treatment and other factors.

Sales Finance

The speakers discuss sales financing options available for tradespeople and field services.

Sales Financing

Sales financing can help tradespeople get customers across the line.

Sales financing can be used to help customers pay for services over time.

There are different types of sales financing available, including point-of-sale finance and vendor finance.

Buy Now Pay Later Model

The speaker discusses the Harvey Norman model and how it has been lacking in the business environment. They introduce a new product that allows customers to pay for services over time without needing payslips or tax returns.

Key Points:

People under 35 are used to getting what they want immediately, which is why the Harvey Norman model works well.

Business environments have lacked this immediacy, particularly affecting tradies who may offer terms of trade but face non-payment or delayed payment.

A new product is available that allows customers to pay for services over time without needing payslips or tax returns.

Customers only need to provide their driver's license and Medicare card, spend five minutes with the trader on an iPad for data entry, and receive immediate approval.

Benefits of New Product

The speaker explains how this new product can increase sales revenue by 10-15% and eliminate accounts receivables data Ledger.

Key Points:

This product can be used to increase sales revenue by 10-15%.

It can also eliminate accounts receivables data Ledger and put cash into your bank account immediately.

This point-of-sale product is a tremendous liquidity support tool that increases your bank account.

It's a non-recourse in the event of payment default.

Trade Association Agreement

The speaker talks about a master facility agreement for a national trade association with 2600 members where tradies were not competing due to customer affordability issues.

Key Points:

A master facility agreement has been finalized for a national trade association with 2600 members.

Tradies were not competing due to customer affordability issues, but this new product will allow them to offer payment plans and increase sales revenue.

The goal is to make this product as prevalent in the trade variety business environment as what Harvey Norman has done in the consumer environment.

Types of Finance Available

The speaker discusses different types of finance available, including trade finance.

Key Points:

Trade finance is an option that can help businesses manage cash flow and mitigate risks associated with international trade.

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Introduction to Working Capital Finance

In this section, the speaker introduces working capital finance and discusses how it can be used by small businesses.

Types of Working Capital Finance

Ledger leverage is a popular product for small business use that allows anyone to pay any bill in any currency, including the ATO. The creditor is paid directly, and trading pays back over equal installments up to six months.

This facility allows good debt in that bills can be paid back principal and interest within six months instead of creating hardcore debt that doesn't go down.

Common Issues with Trade Type Businesses

Many trade type businesses rely on going to banks because they are not aware of options in the working capital markets.

Banks will automatically suggest an increase on overdraft which creates hardcore debt that doesn't go down.

Trades or businesses who use a trade account but don't actually pay them down get into a position where they can no longer use the trade account to purchase their supplies.

Funding Opportunities

Funding opportunities allow businesses to take up opportunities they may not have entertained before.

It's important to look at what your requirements are to fulfill contracts or work you've got coming out and talk to someone about whether you can get funding and what type of funding looks like.

Information Needed for Lenders

When talking to lenders, it's important to prepare information such as cash flow statements, profit and loss statements, balance sheets, tax returns, bank statements, and details about any outstanding loans or debts.

Keeping Your Business Finances in Order

In this section, the speaker discusses the importance of keeping financial records up to date and provides tips on how to do so efficiently.

Importance of Keeping Financial Records Up to Date

It is important to keep financial records up to date, especially if you are a trading business or have debtors and creditors.

Having accurate financial information readily available makes it easier for lenders and investors to make informed decisions about your business.

Cloud-based accounting software and project management tools can help streamline the process of gathering necessary financial information.

Providing Information for Funding Applications

It is important to provide upfront information when applying for funding, but not necessarily every detail.

Generally, an application form will ask for basic financial information such as profit and loss statements and balance sheets.

Providing too much information can lead to more questions being asked, so it's best to keep it simple but talk to someone if you're unsure.

Vehicle and Equipment Funding Options

In this section, the speaker discusses options available for vehicle and equipment funding.

Lower Doc Facilities

Many lenders now offer lower doc facilities that require less documentation from borrowers.

However, it's important to ensure that these products are suitable for your specific needs before applying.

Specialization in Vehicle and Equipment Funding

The speaker specializes in helping tradies secure funding for vehicles and equipment such as trucks, machines, excavators etc.

When working with clients, the speaker helps them determine what type of funding is best suited for their needs and provides guidance on the information they will need to provide.

Understanding Vehicle and Equipment Loans

In this section, the speaker discusses the importance of understanding the terms and conditions of vehicle and equipment loans.

Importance of Knowing Loan Terms

It is important to understand loan terms to avoid unexpected charges during the term of the loan.

Lenders may not provide all necessary information upfront, so it's important to ask questions before submitting an application.

The speaker emphasizes that their goal is to ensure each client gets the best product for their particular circumstances.

Planning for Future Needs

Clients should consider their future plans when deciding on a loan term or refinancing options.

Refinancing decisions should be based on whether clients plan to keep or sell their vehicles in the near future.

Financing Options at Car Yards

In this section, the speaker discusses financing options available at car yards and how they can impact overall costs.

Negotiating Beyond Vehicle Price

Dealers often make up for low vehicle prices through aftermarket products and financing options.

Buyers should research financing options and negotiate beyond just vehicle price.

Cash Flow Funding for Businesses

In this section, the speaker discusses cash flow funding as a tool for businesses.

Benefits of Cash Flow Funding

Cash flow funding can be beneficial for businesses if used correctly.

The right product must be chosen based on specific business needs.

Challenges with Finding Information

It can be difficult to get clear answers from lenders about their products, even for those with industry experience.

Term Loans and Trade Facilities

In this section, the speaker discusses the differences between term loans and trade facilities, and how they can be used to meet different business needs.

Term Loans

A term loan is a fixed amount of money borrowed for a set period of time.

It is useful for long-term debt solutions or large cash injections into a business.

Understanding what your business truly needs is crucial when considering a term loan.

Accountants may not have up-to-date information on your business, but bookkeepers can provide monthly insights.

Trade Facilities

Trade facilities are more suitable for working capital that matches inventory and cash flow cycles.

They offer flexibility in redraw options and do not lock businesses into long-term debt.

Businesses should be wary of long-term hardcore debt in overdrafts, mortgages, trade accounts, and new lenders in the space.

Simple Business Funding

In this section, the speaker talks about simple business funding options available to small businesses.

Up to $50k Funding

For funding up to $50k, no documentation is required except 10 minutes on the phone with an ABN registered for GST and clear credit score.

The facility will be active within 24 hours and can be used with any currency to pay bills anywhere.

This evergreen revolving facility does not require property security.

Factoring of Invoices

In this section, the speaker discusses factoring of invoices and how it can help businesses manage cash flow.

Factoring of invoices is a type of debt financing that allows businesses to sell their accounts receivable to a third party at a discount.

This helps businesses manage cash flow by providing immediate access to funds that would otherwise be tied up in unpaid invoices.

Property finance is for property assets, while business funding is for operating businesses.

Structuring Loans for Asset Acquisition

In this section, the speaker discusses how to structure loans for asset acquisition and the importance of having a good structure.

Loan Structure

Banks may not offer interest-only loans for more than three years.

Complex scenarios may require separate borrowing against personal assets and injecting cash into the line with a separate bank.

It is important to have independence from other parties in loan structures.

There may be complex scenarios where one party has more money to contribute than another.

Financing Business Acquisitions

In this section, the speaker discusses financing options for business acquisitions and how to secure personal investment funds.

Financing Options

Some lenders are willing to lend beyond normal guidelines if there is an asset involved.

Friends, family, and film investors can provide personal investment funds.

Personal investments need to be structured correctly to secure repayment.

Securing Funds

Documenting non-financial institution loans is important.

Setting up a plan for future borrowing is better than trying to borrow now without sufficient funds.

Importance of Good Advice Before Jumping In

In this section, the speaker emphasizes the importance of seeking good advice before making financial decisions.

Seeking Advice

Seeking advice is important because there are many unknowns for those who lack knowledge.

Understanding Lender Policies and Credit Reports

In this section, the speakers discuss how lender policies have changed over the years and how it is important to keep up with these changes. They also talk about the importance of credit reports in understanding one's credit score and financial standing.

Changes in Lender Policies

Regulations and individual lender policies have changed rapidly over the last few years.

People who have been getting finance from the same bank for 20-30 years are suddenly being declined without warning due to changes in lender policies.

It can be challenging to keep up with these changes as they happen sometimes on a daily basis.

Importance of Credit Reports

Getting a credit report is crucial for understanding one's credit score and financial standing.

All lenders now predicate approvals on a person's credit score rather than just their defaults or lack thereof.

Credit reports now include positive credit reporting, which shows the likelihood of defaulting or failing in business, as well as average days to pay within one's industry.

Getting a credit report before seeking finance can help eliminate going to multiple lenders, each of whom registers an inquiry that reduces one's score.

Protecting Your Credit Score

The speaker discusses the importance of protecting your credit score and warns against paying for credit repair services without first understanding what is on your credit report.

Credit Scores and Reports

Equifax is the most commonly used provider of credit scores by lenders.

Other institutions, such as Dunham Bradstreet, also provide credit scores.

Be cautious of businesses advertising free credit scores or expensive credit repair services.

Different providers may have different scores, so it's important to know which one your lender will use.

Credit Repair Services

Be careful when considering paying for a service that promises to remove defaults or judgments from your report.

It's important to understand what they are doing to repair your credit and if it's worth the cost.

Get a copy of your credit report before seeking out any repair services.

Protecting Against Defaults in Sales Finance

The speaker explains how sales finance works and who bears the risk in case of default.

Sales Finance

If you provide point-of-sale finance to a homeowner, you may be at risk if they default on payments.

If there is no dispute about the quality of workmanship or business performance, then monetary defaults are not the responsibility of the seller but rather that of the homeowner/customer who defaulted on payment.

In business-to-business sales, the seller is responsible for defaults.

Finance for Bankrupts and Discharged Bankrupts

The speaker discusses the difficulties of obtaining unsecured finance for bankrupt individuals, but notes that it is possible if the individual has retained their family home and has full-time employment. They also mention an option where a company will lease a car to a business owner trying to improve their credit score after bankruptcy.

Obtaining Unsecured Finance for Bankrupt Individuals

It is difficult to obtain unsecured finance for bankrupt individuals.

If the individual has retained their family home and has full-time employment, it may be possible to obtain unsecured finance.

Leasing Cars as an Option

Companies exist that will lease cars to business owners trying to improve their credit score after bankruptcy.

This option costs less than hiring a vehicle from companies like Hertz or Thrifty.

If the individual maintains good payment history for 12 months, they can look into refinancing with a major lender.

Tips on Understanding Financial Tools and Planning Ahead

The speaker provides tips on understanding financial tools and planning ahead when starting or running a small business. They suggest getting familiar with available tools, creating a plan, seeking advice from an advisor, obtaining a credit report, and hiring a bookkeeper.

Understanding Available Financial Tools

Get familiar with available financial tools.

Seek guidance from experts if needed.

Creating a Plan

Create a plan for your business's future.

Consider personal goals as well as business goals.

Seeking Advice from an Advisor

Seek advice from an advisor who can help you implement specific solutions based on your needs.

Obtaining Credit Report

Obtain your Equifax credit report.

Review your credit report before seeking advice from an advisor.

Hiring a Bookkeeper

Hire a bookkeeper to manage cash flow and keep track of late payers and creditors.

A good bookkeeper is worth their weight in gold.

Importance of Integrating Technology in Finance

The speakers discuss the importance of integrating technology, specifically cloud-based accounting packages like Zero, in finance tools to pull data and streamline processes.

Integrating Technology for Efficient Finance Tools

Cloud-based accounting packages like Zero can help integrate and pull data from various sources.

Moving towards a cloud-based accounting package can save time and benefit personal life or business.

Benefits of Having a Good Finance Advisor

The speakers discuss the benefits of having a good finance advisor on your team, including their ability to help with lenders during rough patches.

Right People for the Right Job

Having the right people for the right job is crucial in finance.

A good finance advisor can help with talking to lenders during rough patches and work out arrangements.

They understand your business already and can often come up with solutions that either the lender might not think of or you may not think of as someone outside the finance industry.

Understanding and Monitoring Credit Score

The speakers emphasize understanding credit scores after obtaining credit reports and monitoring them regularly.

Importance of Understanding Credit Scores

After obtaining credit reports, it's important to understand your credit score.

Credit scores are constantly changing, so monitoring them regularly is crucial.

Cost Benefit Analysis in Finance

The speakers discuss how cost-benefit analysis should be considered when looking at interest rates and the importance of having a team around you.

Cost Benefit Analysis in Finance

It's important to consider cost-benefit analysis when looking at interest rates.

Clients have missed tremendous opportunities because they only focus on getting the rate they want, not considering the overall project cost.

Importance of Having a Team Around You

Having a team around you, including a good bookkeeper, accountant, and finance advisor, can help free up your mind to keep running your business.

Trading Pad as an Advisor

The speakers discuss Trading Pad as an independent advisor that provides free advice.

Trading Pad as an Independent Advisor

Trading Pad is an independent advisor that provides free advice through phone calls or visits.

They will be completely upfront with you whether they like or don't like something about your business.

Importance of Having a Team Around You (Continued)

The speakers continue discussing the importance of having a team around you.

Importance of Having a Team Around You (Continued)

You don't have to be an expert in everything if you have a team around you with knowledge from their specialties.