As an accountant there is no doubt you are regarded by your SME clients as one of their most trusted business advisors.
Assisting your SME clients to grow and prosper should also include helping them to obtain competitive and correctly structured business finance products, including asset and equipment finance.
Your clients will already have numerous avenues to source their asset or equipment finance – they could go directly to their bank, use a finance broker or obtain the finance directly from a lender associated with a car dealer or equipment supplier.
However, are the above organisations or people suitably qualified to provide expert structuring and taxation advice to your valued clients?
Furthermore, do they have your clients long term interests and success at heart or is the deal all about earning a large one-off commission and moving on the next customer?
We see many instances of poorly structured or overly expensive asset and equipment finance facilities taken out by SME clients who have not consulted with their accountant before entering the finance contract.
And guess who they expect to help fix the mess!
Here are three critical reasons why we believe accountants should proactively assist their clients when it comes to arranging asset and equipment finance.
Correct deal structuring
Compared to a car dealer, an equipment supplier or even your client’s bank, accountants are best placed to ensure asset and equipment finance loans are correctly structured for their clients.
This structuring advice can include:
1. Ensuring the most appropriate loan product has been used by your clients.
2. Ensuring the correct business entity holds the business equipment (and associated finance contract) whether it be an asset owning entity or trust for example.
3. The proposed loan term and structure. For example, ensuring the loan structure aligns with ATO safe harbour depreciation guidelines and the proposed usage of the business equipment. Advising your clients to avoid excessive balloon payments when financing high mileage motor vehicles is a great example of how you can add value to your client relationships when it comes to deal structuring.
Expert taxation advice
Once the most appropriate loan product and structure has been determined, this will allow your clients to maximise any potential taxation benefits relating to their asset and equipment finance.
This can include:
1. Maximising available input tax credits for GST relating to the acquisition of the business equipment or motor vehicles.
2. Ensuring depreciation and interest expenses are accurately recorded and claimed.
3. Recording any profit or loss on future business equipment disposals.
Being qualified to provide the above expert taxation advice to your SME clients puts you well and truly in the “box seat” to assist when they need additional asset and equipment finance.
Getting a great deal for your client
As an accountant, we understand your strategy is to build long term and sustainable relationships with your SME clients and chasing large one-off finance commissions to the detriment of your client is not how you operate.
Rather, securing a competitive finance deal and earning a reasonable commission for the finance referral will result in a better outcome for your clients.
And given you already have your client’s financial information on file, you can generally offer a much quicker and streamlined application process when you team up with the right referral partner.
What is the potential opportunity?
Let’s assume your accounting practice has successfully built a solid client base of 500 SME clients.
We’ll also assume that each SME client has (on average) three business assets (vehicles and/or equipment) that have been purchased and financed using an asset finance product.
Finally, the above clients will upgrade or change over their business vehicles or equipment on average every four years.
This means that up to 375 asset finance deals are being transacted by your clients EVERY year or, on average, around 30 deals per month!
What a perfect business opportunity that aligns with your role as the trusted business advisor!
But does your practice have the necessary resources, upskilled staff, or the required lender accreditations to take advantage of this opportunity?
Like most accountants we work with, the answer to this question will be NO.
This is where NLG Leasing can assist by providing a cost-effective asset and equipment finance “outsourcing” solution to your accounting practice.
We have a dedicated team of asset finance specialists and access to an extensive lender panel which ensures your SME clients will get a competitive and sensible finance deal.
If you are interested in forming a strategic referral relationship with NLG Leasing to capture the above opportunity and add value to both your client relationships and your own business, please feel free to get in touch for a no obligation and confidential discussion.
Stephen Light | National Partnership Manager | NLG Leasing
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- Why it makes sense for accountants to arrange asset and equipment finance - November 17, 2020