Refinancing figures are on a record-breaking run: here’s why

With interest rates at record low levels, the number of homeowners refinancing skyrocketed to an all-time high in July. Today we’ll run you through why so many people are refinancing, and why you should consider doing so too.

We’re currently seeing more people refinance their home loans than ever before, and the latest ABS figures out this week prove we’re not imagining things.

Refinanced home loans reached an all-time high of $17.2 billion in July, which is a 6% increase on June.

It’s also more than double the value that was refinanced exactly two years prior in July 2019.

So why are homeowners refinancing in record numbers?

For starters, the RBA cash rate is at an all-time low of 0.1% following six rate cuts in three years.

As such, competition amongst lenders is fierce, with many offering record-low home loan rates in a bid to win over as many customers as possible.

In fact, RateCity reports the number of variable rates under 2% on its database has jumped from 28 to 46 in just two months.

Borrowers are also opting to lock in their interest rate too, says the ABS, following reports that lenders have started increasing the rates on 3-5 year fixed-rate loans.

“Borrowers are seeking out lower interest rates, particularly for fixed-rate loans, and cashback deals across a large number of major and non-major lenders,” says ABS head of Finance and Wealth, Katherine Keenan.

COVID-19 is likely increasing the number of homeowners refinancing, too.

With many households and businesses around the country doing it tough right now, one simple way to reduce your monthly mortgage repayments is by refinancing.

How we help you refinance the right way

Now, fixed-rate loans and cashback deals might look super appealing at first glance, but they might not always be the best fit for your situation.

And that’s why it helps to have someone like us in your corner.

We can help you go through the fine print, fees and limitations that might exist within these loan options.

We can also help you determine whether a fixed, variable or split loan is better suited to your needs.

The other thing we’re great at is negotiating with your lender.

Your current lender won’t automatically give you their lowest rate going. You’ve got to ask them for it.

And you’ve also got to make it clear that if they don’t reduce your interest rate, you’re willing to find another lender who will.

This can be both intimidating, not to mention time-consuming and frustrating if they don’t want to play ball.

But lucky for you, we can do the leg-work for you.

So if you haven’t refinanced in the past few years, get in touch with us today and we could help you save thousands of dollars in interest repayments on your mortgage.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are they really OK? Here’s how to check in with them today

Do you know how the people in your world are really doing right now? Chances are you know someone who’s doing it tough, but silently pressing on. As always, we’re here to support you, and for R U OK? Day we’re sharing ways you can help others.

Life’s ups and downs happen to all of us. So chances are you know someone who is struggling right now.

They might not have seen their family for months, their business could be operating under the strains of COVID-19, or they might be having trouble meeting their mortgage repayments.

And here’s the thing: we’re not all blessed with the natural conversation instincts and EQ of someone like Andrew Denton.

So sometimes we put off tough conversations for fear of making the situation worse.

But rather than wait until someone’s visibly distressed or in crisis before offering them support, we wanted to mark R U OK? Day by sharing the charity’s tips for starting the conversation.

1. Pick your moment

Meaningful moments are more likely to take place when we’re spending quality time together.

While this can be difficult to do during a lockdown, below is an example of some everyday situations that may be a good time to ask someone if they’re ok:

– while exercising together
– when spending time together socially or during an activity
– during breaks from work or study
– when connecting or doing activities together online
– while sharing a meal
– while travelling together – even a short trip can be a good time to talk.

2. How to ask ‘R U OK?’

Start the conversation at a time and in a place where you’ll both be comfortable.

Be relaxed and friendly in your approach. And think about how you can ease into the conversation.

If they don’t want to talk, let them know you’ll be there for them when they’re ready, or ask if there’s someone else they’d be more comfortable chatting to.

Examples of how to check in with them include:

– I haven’t seen much of you lately, is everything going ok?
– So, how are you travelling these days?
– You’ve been a bit tired, how are things going?

3. Listen with an open mind

Once they start to open up to you, be prepared to listen. Don’t try to solve their problems right away and have an open mind.

Some other tips include:

– don’t rush them or interrupt. Let them speak in their own time
– encourage them to explain
– show you’ve listened by repeating back what you have heard and asking if you have understood them correctly.

4. How to encourage action

You don’t have to have the answers or be able to offer professional advice but you can help them consider the next steps they can take to manage their situation.

You can get the ball rolling by asking them:

– Where do you think we can go from here?
– What do you need from me? How can I help?
– Have you thought about going to see your GP?

5. Check-in again soon after

Be sure to follow up in a few days to see how they’re doing.

During the conversation, ask them to suggest a time that’s good for them, or simply ask: “Do you mind if I drop by again soon to see how you’re travelling?”

When you check in, ask how they are feeling and if anything has helped since the last time you spoke. If they have not taken any steps yet, be patient and ask if they would like to find some options together.

Understand that it can take time for people to seek help. Stick with them. Your genuine support will mean a lot to them.

Feel free to reach out to us, too

We like to think of ourselves as more than just your broker who you turn to when you need a loan – but also a friend you can turn to in times of need.

So if you’re not feeling OK today, tomorrow, or next month, feel free to give us a call whenever you need. We’re always here to listen and help in any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Nine in 10 FHBs trust brokers to help them buy their first property

Remember that classic TV ad: ‘nine out of 10 dentists recommend using [toothpaste brand]?’ Well, it turns out we’ve earned a similar level of trust when it comes to helping first home buyers sink their teeth into the property market. 

That’s because nine out of 10 first home buyers (FHBs) recently said they trust a mortgage broker to help them buy their first property.

And, unlike dentists, we’re actually allowed to show our faces!

So why do so many first home buyers trust mortgage brokers?

The Genworth First Home Buyer Report 2021 surveyed 2,077 prospective FHBs, and 1,008 recent FHBs – and we’re pretty chuffed with the results.

Here’s what one respondent said:

“Go and see a professional broker in-person early on in the process. That way they know your situation and are able to best guide you through and help you out,” the 32-year-old recent FHB from WA said.

And he wasn’t alone.

Almost nine in 10 FHBs believe mortgage brokers help cut through the complexity in the home buying process.

The report also found a similar proportion of FHBs believe mortgage brokers provide reliable, trusted advice and information.

And finally, close to 90% of respondents said mortgage brokers provide valuable support during the home buying process.

So in a nutshell:

Trusted = tick.
Jargon busters = tick.
Reliable advice and information = tick.
Valuable support = tick.

How we could help you buy your first home

You might have noticed the property market has picked-up over the past 12 months, to say the least.

It’s left a lot of prospective first home buyers frustrated that the suburbs they were once focusing on have moved out of their price range.

While this may be the case for a lot of people, it’s not always the case.

There are a number of federal government schemes available to FHBs, including the First Home Loan Deposit Scheme – which can allow you to buy your first home with a deposit of just 5% without paying for Lenders Mortgage Insurance.

There’s also a range of state and territory government schemes designed to give FHBs a leg up into the property market, including first home buyer grants and stamp duty concessions.

For more information, give us a call today – we’d love to discuss your situation and help you make the leap from renter to first home buyer, and get you smiling as proudly as your dentist does!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to ease financial pressure through debt consolidation

With many people around the country doing it tough right now, this week we’ll look at a way you can take some pressure off your monthly finances through debt consolidation.

Here’s a quick experiment.

Go pick up three balls and try to juggle them. Most people, besides those who ran away to join a circus, will likely drop at least one of them within a few tosses.

Now put two of the balls aside and throw the remaining ball up and down (with one or both hands).

Much easier to manage, right?

Well, it’s not too dissimilar to the concept of debt consolidation.

If you have more than one loan – be that a credit card, car loan and/or a personal loan – you can help reduce the stress of juggling multiple debts, payment dates and interest rates by rolling them into one easy-to-manage loan.

There are other benefits, too

One common debt consolidation method is to take out a new personal loan and use the funds to pay off your other existing debts.

Now, if the interest rate on the new personal loan is lower than the rate on your existing debts (for example, a credit card with a 17.99% interest rate) this can help you pay less interest each month – not to mention avoid the nasty late payment fees that come with those kinds of cards.

And by rolling all your debts into one, you can get a clearer timeline of when you can be debt-free.

Debt consolidation can also make it easier for you to manage your household budget, as you only need to factor in repayments for one debt per month instead of many.

Refinancing your home loan for debt consolidation

Another method people use for debt consolidation is rolling it into a refinanced home loan, because mortgages offer comparatively low-interest rates.

So if you’re really struggling with multiple debts right now – such as a car loan or a number of credit cards – consolidating your debts into your home loan will, in most cases, reduce your overall monthly repayments.

However, here’s a big word of warning.

While this option can reduce your monthly repayments now, debt consolidation through your mortgage can turn a short-term debt (like a personal loan) into a much longer-term debt.

As such, unless you aim to make a lot of extra repayments as soon as possible, you could end up paying significantly more interest than you would have otherwise.

One way to address this issue is to create a loan split for the debt consolidation, giving you the ability to pay off all the short term debts within a few years, rather than, for example, over a 25-year home loan period.

So if you’re in need of breathing space now, debt consolidation is an option to consider – especially with mortgage rates so low at present due to the RBA’s official cash rate being at record low levels.

Get in touch today

If you’d like to explore your debt consolidation or refinancing options, then get in touch with us today and we can help you look at ways to take some financial pressure off your shoulders.

It’s also worth noting that lenders are providing mortgage holders impacted by COVID with a range of hardship support measures, including loan deferrals on a month-by-month basis.

Whatever your circumstances, we’re here to support you however we can through these times.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

SME Recovery Loan Scheme revamped to help more businesses

More small and medium-sized businesses struggling to stay afloat due to the economic impacts of COVID will have access to cheaper funding after the federal government expanded the eligibility criteria for the SME Recovery Loan Scheme.

The government is removing requirements for SMEs to have received JobKeeper during the March quarter of 2021, or to have been a flood-affected business, in order to be eligible for the SME Recovery Loan Scheme.

What’s special about the SME Recovery Loan Scheme?

Ok, basically the federal government will guarantee 80% of each loan in the scheme, and because of this, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans.

The first iteration of the scheme kicked off back in March 2020 under a slightly different name – the SME Guarantee Scheme (and back then the government was only guaranteeing 50% of the loan).

Under today’s version of the scheme, SMEs dealing with the economic impacts of COVID with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.

Other key features of the SME Recovery Loan Scheme include:

– Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
– Loans can be used for a broad range of business purposes, including to support investment.
– Loans may be used to refinance the pre-existing debt of an eligible borrower, including debts from the SME Guarantee Scheme.
– Loans can be either unsecured or secured (excluding residential property).

Could this scheme help your business?

So far, 74,000 loans totalling around $6.2 billion have been written under the scheme – so it’s already helped a lot of other businesses around the country.

NAB and Westpac, both participating lenders in the scheme, immediately welcomed the changes, with NAB stating “SME Recovery Loans are a good option for businesses who need additional capital at this time”.

It’s important to note, however, that the loans will only be available through participating lenders until 31 December 2021.

So if you’re interested in finding out whether the SME Recovery Loan Scheme could help your business, get in touch today and we can help you apply through one of the participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

COVID hardship and grant options that could help you

With the pandemic once again tightening its grip around many parts of Australia, today we’ll run you through hardship and grant options that could be available to you or your business.

Setting all politics aside, it’s safe to say no one wants to be here. Yet here we are – this time with no JobKeeper or the original JobSeeker payment to help keep us afloat.

So what grants, schemes and hardship arrangements are available to small businesses and individuals this time around?

Let’s run through this year’s COVID support options below.

Loan deferrals on home and business loans

Impacted small businesses with loans in good standing are being supported by lenders with repayment deferrals of up to three months.

For home loan holders, lenders are also providing a range of support measures, including loan deferrals on a month-by-month basis.

Since July 8, more than 14,500 home loans have been deferred, while more than 600 business loans have been deferred.

“Support is available to all small businesses and home loan customers significantly impacted by current lockdowns or recovering from recent lockdowns, irrespective of geography or industry,” says Anna Bligh, CEO of the Australian Banking Association.

Business grants and payments

As you’ll see below, each state and territory has their own grants and schemes available for businesses and individuals.

As the situation is constantly evolving, it’s worth double-checking to see if your business is eligible for any other grants or payments not listed below.

NSW: If you’re a business, sole trader or not-for-profit organisation in NSW and you’ve been impacted by the recent COVID-19 restrictions, you may be eligible for a one-off grant of $7,500, $10,500 or $15,000. Apply here by September 13.

Victoria: There are several grants in Victoria for employing and non-employing businesses. The Small Business COVID Hardship Fund provides $10,000 grants for eligible SMEs that have experienced a reduction in turnover of at least 70%. Apply here by September 10. The Business Costs Assistance Program Round Two offers grants of $4800 to eligible businesses in specific industriesApply here by August 20.

Queensland: Lockdown-impacted businesses in Queensland can apply to receive a grant ranging from $10,000 to $30,000, depending on the size of their annual payroll. Grants of $1,000 are also available for non-employing sole traders. Apply here by November 16.

Western Australia: The Small Business Lockdown Assistance Grant: Round Two provides $3000 cash flow support to small businesses in industry sectors most impacted by the recent circuit-breaker four-day lockdown and interim restrictions. Apply here by August 31.

South Australia: Small and medium-sized businesses forced to close as a result of the state’s lockdown (beginning 20 July 2021) may be eligible for a $3,000 emergency cash grant. Sole traders may be eligible for $1000. Apply here by October 17.

ACT: COVID-19 Business Support Grants will provide up to $10,000 for employing businesses and up to $4,000 for non-employing businesses that experienced a turnover decline of 30% or more as a result of the COVID-19 lockdown health restrictions. Find out more here.

For individuals

The federal government’s COVID-19 Disaster Payment is a lump sum payment to help workers unable to earn income due to a COVID-19 state public health order.

This may involve a lockdown, hotspot or movement restrictions. How much you can get depends on your location and circumstances. It’s available to eligible ACT, NSW, QLD, SA and Victoria residents.

Tenant and landlord support

NSW landlords who reduce rents for tenants hard-hit by the pandemic will be able to access up to $3,000 per tenancy agreement.

For landlords to be eligible, their tenant’s take-home weekly income must have fallen by 25% or more. The tenant also needs to continue to pay at least 25% of the rent payable.

Meanwhile, the Victorian Government has made it a requirement for commercial landlords to provide rent relief that matches their tenants’ fall in turnover in response to coronavirus, where the tenant is eligible for commercial tenancy relief support.

Get in touch today

Last but not least, it’s worth noting that there are refinance or restructure options you can explore in order to reduce your business or home loan repayments each month (without hitting the pause button). These include:

– asking for a better rate or moving to a lender that can provide one;
– extending the length of your loan;
– switching to interest-only payments for a period of time; and
– consolidating debt.

So if your business or household is one of the many doing it tough again, please get in touch today – we’re ready to assist you through 2021 and beyond, in any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

New super laws: a timely reminder to check your life insurance policy

What measures do you have in place to help protect your family home or business? If life insurance through your superannuation account is one of them, then it’s a good time to give it a quick review – especially if you work in a high-risk environment.

We’ve all switched off mentally during those sombre daytime life insurance ads on TV.

But stay with us, because there’s a good reason we’re writing this article today: new superannuation laws have passed parliament and will come into effect on November 1.

And if you have a super account, there’s a better than even chance you have a life insurance policy attached to it that could be impacted – especially if you work in a hazardous or high-risk industry such as construction, truck driving and mining.

What are the new laws?

So, the federal government recently passed the Your Future Your Super legislation.

The measure, which will tie workers to a single super fund from November 1, has been praised for its potential to put an end to people having numerous super accounts that are eaten away by multiple sets of fees.

But concerns have also been raised that workers in hazardous industries, such as construction, truck driving and mining, will be left without suitable life insurance and/or total and permanent disability insurance due to policy exclusions for high-risk occupations.

Now, some super funds that were created for specific industries automatically sign their members up for insurance tailored to their specific professions.

But others don’t.

“Quite often, members only discover they have been paying for a product that is effectively useless when they become disabled and make a claim,” Maurice Blackburn principal Hayriye Uluca explained to Sydney Morning Herald (SMH).

This means if you originally signed up to a fund that is tied to an insurer that uses occupation exclusions, you might end up paying for insurance that’s essentially worthless if you start work in a high-risk industry.

What to do?

The Federal Treasury says it’ll be conducting a review into it all.

But you can quickly and easily conduct your own review to see if you’re properly covered by suitable insurance.

Here’s a straightforward MoneySmart guide on consolidating your super through MyGov. And here’s another guide on things to be mindful of when choosing a super fund.

“The best thing to do is talk to your fund, ask them specifically. Tell them the type of work you do, your occupation and what it involves, and ask them if their policy covers it,” SuperConsumers director Xavier O’Halloran told SMH.

And while you’re at it, don’t forget to review the amount you’re insured for to determine whether your cover is enough to help you – or your loved ones – make loan repayments and protect important assets like your business or family home if need be.

If you’re not sure if your insurance cover is sufficient, call us today and we can put you in touch with a financial planner who can review your situation and provide feedback on your coverage.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

House price growth hits 17-year high, but is it slowing down?

You’d have to go all the way back to the 2004 Athens Olympics to find a time when house price growth was faster than it has recently been. But latest data suggests the golden run has started to slow down.

It’s no secret that house prices have reached record-breaking highs this past year.

In fact, home values grew by 16.1% over the past 12 months – the fastest pace of growth since 2004, according to CoreLogic’s latest Hedonic Home Value Index.

To put that into a little context, the rate of growth over the past year has been so steep that houses in some cities are out-earning some of Australia’s top-paid professionals, including surgeons, anaesthetists and CEOs.

But there are signs that the growth rate is starting to taper.

Signs of a slow down

Australian housing values increased 1.6% in July, a result CoreLogic’s research director Tim Lawless describes as “strong, but losing steam”.

“The monthly growth rate has been trending lower since March this year when the national index rose 2.8%,” Mr Lawless explains.

And in a further sign of a property market slowdown, the value of new housing loan commitments fell 1.6% in June, the first fall in monthly lending figures this year, according to the latest Australian Bureau of Statistics data.

So what’s slowing things down?

With dwelling values rising more in a month than incomes are rising in a year, housing is simply moving out of reach for members of the community, Mr Lawless explains.

Additionally, much of the federal government’s earlier COVID-19 related fiscal support, including JobKeeper and HomeBuilder, have now expired.

“It is likely recent COVID outbreaks and associated lockdowns have contributed to some of the loss of momentum as well, particularly from a transactional perspective in Sydney which is enduring an extended period of restrictions,” CoreLogic’s latest Hedonic Home Value Index report adds.

That said, it should be noted that housing values are continuing to rise substantially faster than average.

Over the past 10 years, the average pace of monthly dwelling value appreciation has been just 0.4%, says CoreLogic.

So what’s ahead?

It’s likely the rate of growth will continue to taper through the second half of 2021 as affordability constraints become more pressing and housing supply gradually lifts, says CoreLogic.

“Other potential headwinds are apparent, including the possibility of tighter credit policies,” adds the CoreLogic report.

On the flip side, demand remains strong and is being aided by record-low mortgage rates and the prospect that interest rates will remain low for an extended period of time.

“A lift in the cash rate is likely to be at least 18 months away,” CoreLogic adds.

“The recent spate of lockdowns is likely to see Australia’s economy once again contract through the September quarter, a factor that is likely to keep rates on hold for a while longer.”

Get in touch

With house prices having just experienced their fastest pace of growth since 2004, it’s as important as ever to purchase your new home with a finance option that’s right for you.

So if you’re a keen homebuyer who wants to explore what options are available to you – including your borrowing capacity – get in touch today. We’d love to run through it with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Cash flow tips for businesses thriving and surviving the pandemic

Australia is a tale of two economies right now, depending on the state or sector your business is based in. Today we’ll run you through three cash flow tips for your business, whether it’s growing or struggling.

Covid-19 has really brought a two-speed economy to the fore in Australia.

For some businesses, the stop-start-stop nature of the pandemic has crippled cash flow and made planning ahead all but impossible.

Meanwhile other businesses, such as those in the digital space, are experiencing fast growth.

Your cash flow strategy this financial year will likely depend on how the pandemic is impacting it.

So below SME lender ScotPac has identified three cash flow management strategies for businesses that are growing, and for those that are struggling.

Three tips for managing growth

1. Find a flexible source of funding: strong cash flow is important for fast-growth businesses, which often have lots of cash tied up with debtors, ScotPac senior executive Craig Michie says.

“It’s important to find a source of funding that grows as your business grows. With invoice finance, as your debtors grow, so does the line of credit you can access,” he says.

“Another consequence of fast growth can be a demand on the business to put in place more capital assets, such as vehicles and equipment. In these situations, asset finance can help a business get the assets they need to support their rapid growth.”

2. Negotiate with suppliers: sometimes businesses can grow too fast for their suppliers to keep up with their demand for product.

If you don’t have the cash flow to pay your supplier for more product up front, you can attempt to renegotiate terms with them, or seek alternative finance options.

“One option for fast-growth businesses to have up their sleeves is to use trade finance. This ensures they can pay suppliers upfront so they can meet their increased demand for product,” Mr Michie says.

3. Cashflow forecasting is vital: cash flow is often described as the “lifeblood” of businesses.

Knowing what cash is likely to be coming in, and what’s likely to be going out, is therefore vital for not only keeping your businesses alive, but ensuring it will thrive.

“It’s not unusual for a small business to spend months winning big new clients, then realise they had not accounted for the cashflow implications of winning new business,” Mr Michie says.

“Putting in place a 13-week rolling cash flow forecast – which really would only take an hour with your accountant to set up, helps fast-growth businesses avoid cash flow issues.”

Three tips for getting through tough conditions

1. Get in touch with funders and the tax office: with a number of recent state lockdowns, and ongoing uncertainty in NSW, many businesses are doing it tough.

Mr Michie says it’s crucial for businesses struggling through adverse trading conditions to talk to their financiers asap.

“Do this early in the piece to get the best outcome. Talk to your funder about whether it’s possible to restructure or to put in place moratoriums,” he says.

He adds that SMEs shouldn’t put off talking to the Australian Tax Office either.

“Too many businesses make the mistake of thinking a problem ignored is a problem solved – getting on the front foot with tax obligations is vital.”

2. Look at your balance sheet: to help secure working capital for your business, Mr Michie suggests looking to the assets on your balance sheet.

“Balance sheet assets can be a hidden resource for many SMEs – your debtor’s ledger, unencumbered plant and equipment and even inventory can be used to bring working capital back into the business.”

3. Again, cash flow forecasting is vital: Mr Michie says that having a running 13-week cashflow forecast lets business owners spot any cashflow gaps on the horizon, with enough time to do something about it.

He suggests that this could include reassessing your cost base, negotiating with creditors to change terms or defer payments, or chasing up aged receivables.

Last but not least, get in touch

If you’d like to discuss how any of the above cash flow tips or finance options could help your business, get in touch today.

The sooner we can run through your options with you, the better placed your business can be in the 2021 financial year and beyond.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Buy Now Pay Later users put on notice by credit agency

Do you use a Buy Now Pay Later (BNPL) service like Afterpay or Zip? If so, be warned that one leading credit agency has made a big change that means your BNPL data will go onto your credit report.

BNPL transactions have risen rapidly over the past few years – so much so that they caught financial regulators and credit reporting agencies a little flat-footed.

But Equifax, one of the three main credit reporting agencies in Australia, looks to have caught up.

In a recent email to brokers and lenders, Equifax states that BNPL accounts and transactions will be included in credit reports from 24 July 2021.

“Expect to see two new BNPL account types available for accounts, enquiries and defaults,” the Equifax email reads.

So what does this mean for your credit score?

Don’t stress, time is on your side!

That’s because it’s still early days and Equifax wants to measure how much BNPL data could affect overall credit scores.

“The new BNPL Comprehensive Credit Reporting (CCR) account types will be quarantined from scores in the short term to prevent any unintended and inappropriate impact on scores. As data builds up over time, we will reassess,” Equifax explains in a FAQ here.

But, Equifax adds, BNPL accounts and transactions will be included in CCR scores as soon as they believe it is sensible to do so.

“We are moving cautiously as we have never seen these types of accounts before, so it is not possible to evaluate and reflect the relationship between [BNPL accounts and transactions] and risk accurately,” they add.

“Equifax will monitor the risk of these accounts as the data accumulates over time.”

But that doesn’t mean lenders won’t be paying attention

It’s worth reiterating that lenders will now still be able to see BNPL transactions and accounts in your Equifax credit report, and according to a parliamentary joint committee this week, they’re already paying very close attention.

Liberal MP and committee chair Andrew Wallace put the following to Zip Co co-founder and chief operating officer Peter Gray: “I have heard that if banks see repayments to buy now, pay later providers, the banks take a very dim view of that person’s credit assessment.”

Mr Gray responded by saying banks would “absolutely” see BNPL providers in a negative light, before later stating: “I can confirm to the committee that the number one reason for [people] closing their [Zip] account is because their bank has told them they need to, to proceed with the mortgage.”

Get in touch today

If you’re worried about what a BNPL account – or multiple accounts – could mean for an upcoming finance application, get in touch with us today.

We’ll be able to run through it with you and give you some pointers on what you can do to get things sorted before applying for finance.

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