If you’re an accountant, bookkeeper or business adviser, you can expand your service offering by incorporating different products and services into your repertoire.
There are many benefits that come with expanding your offering — for your clients and for you too! We discuss broadening your offering by teaming up with a business finance provider, and the many benefits that come with it.
The benefits of expanding your offering
You’re in a great position to provide a huge amount of value to your clients, but what impact could it make if you could provide even more value? Teaming up with a finance provider can be hugely beneficial for you and your clients.
Expanding your offering with financial products can provide you with a range of benefits, including:
1) Maximising your income through earning referral commissions. There are many potential revenue streams in the highly competitive financial service industry that you can tap into. These revenue streams can become passive income.
2) Becoming a more convenient, one-stop-shop for your clients’ financial needs. This can increase your chances of securing new clients, as well as keeping your existing ones. Providing a service or advice to your clients is one thing, but with the right financial products on your side, you can help your clients take the next step of implementing strategies that could make a huge difference for the direction of their business.
3) Being better able to help your clients solve financial issues. Think of it this way; if you’re a bookkeeper and your clients are struggling hugely with late-paying customers, rather than helplessly watching them suffer, you could be in a position to help them manage their cash flow issues with products that are outside of the usual service you provide.
4) Helping your clients to exploit growth opportunities.
Let’s look at these last two benefits in a little more detail.
Helping your clients to solve financial issues
Common financial issues for businesses include:
- Cash flow issues (in fact, it’s the leading cause of business failure in Australia).
- Late-paying debtors (which leads to cash flow issues).
- Insufficient working capital to purchase stock.
Invoice Finance enables businesses to access cash from their unpaid customer invoices as a line of credit. It’s ideal for any business that offers other business (B2B) or government customers credit (like 30-day or 60-day accounts), but doesn’t want their credit terms to impact their cash flow. The line of credit grows as the business raises more invoices — meaning there is access to continually growing capital if the business needs it to further expand.
Trade Finance provides businesses with the finance needed to pay their suppliers upfront for stock. It bridges the cash flow gap between purchasing and selling stock so that businesses don’t have to miss out on sales due to not being able to afford to buy stock.
Helping your clients to exploit growth opportunities
A lack of working capital can prevent businesses from growing. Access to finance can help by:
- Allowing businesses to buy the equipment or vehicles needed for their business to expand.
Equipment Finance enables businesses to get the assets and equipment they need without having to come up with a large, upfront capital outlay.
- Bridging cash flow gaps so businesses can afford to take on the next job or project before their debtors pay them.
As mentioned earlier in this article, both Invoice Finance and Trade Finance are solutions for cash flow issues. Trade Finance is used in conjunction with Invoice Finance to maximise the benefits of both.
Helping your clients to exploit growth opportunities
Here are five tips for identifying finance opportunities among your clients.
Tip 1: Focus on specific industries
Not all businesses are suitable for an invoice finance solution. It is tailored for SMEs that sell goods or services to other businesses or government agencies on standard trade credit terms.
This is by no means an exhaustive list, but you should check your client base for businesses operating in these industries:
- Transport and logistics.
- Labour hire.
- Building materials supply.
- Food and beverage supply.
- Printing, media and telecommunications.
- Information technology products and services.
- Import and export.
Tip 2: Check your clients’ debtor books
Every debtor book is set up differently, but most businesses will have invoice categories showing 30 days, 60 days, 90 days and so on. Clients with a significant proportion of their outstanding invoices in the 30 or 60 days columns are likely to be good candidates for invoice finance.
This is an indication the client’s business is healthy, but that they are still waiting on much-needed cash. Invoice Finance can help them access up to 80 per cent of the value of their unpaid invoices while they await payments to trickle through.
Tip 3: Find growth-oriented businesses
Businesses need capital to expand, whether it’s setting up a new office, purchasing better equipment or simply investing in the stock and labour needed to take on more orders. Often, restricted access to capital means clients’ customers go elsewhere to fulfil their procurement needs. Gaps in your clients’ service or product range risks competitors attacking their customer base, as well as their customer expectations and requirements being unfulfilled.
Some SMEs may face difficulties accessing finance from their existing lenders, particularly if they’ve already maxed out their overdraft and other lines of credit, or if they have ATO debt. You should see this as an opportunity to support growing business owners who have profitable operations but who need a helping hand to fulfil their potential.
Tip 4: Find SMEs with cash flow concerns
Do your clients often have short-term cash needs? Invoice finance is a valuable tool for helping SMEs overcome the cash flow gap between getting paid and meeting their payment obligations. It can support businesses during difficult trading conditions.
Tip 5: Talk to business owners with personal assets at risk
Many small business owners finance their organisation through secured bank loans, with the majority putting their family home up as collateral. Risking personal assets places an incredible burden on many budding entrepreneurs, but this is usually unavoidable when getting an SME up and running.
Once a business can stand on its own two feet, most owners will be keen to restructure their debt obligations to free up the family home and any other assets trapped as security. This ensures that their assets can be more readily available for estate planning.
An invoice finance facility can help SME owners to divest their personal property from their businesses, while also providing an injection of capital for growth or cash flow assistance.