Top tips for writing asset finance deals
In the final installment of Connective Asset Finance’s Asset Assistance series, Josh Ugo of Finicky Finance reveals his top tips for writing asset finance deals.
How did you start writing asset finance?
I started my finance career working for a motor vehicle finance broker. Motor vehicle is a subset of asset finance. I was speaking with commercial clients and identifying opportunities for equipment funding; the natural progression was to finance those assets and increase my product offering. So, that’s how I started!
What kind of loans do you write?
I primarily write chattel mortgages. There are other asset funding options, such as: leasing, rentals, cash flow, etc. We find that 95 per cent of the time, the customer chooses a chattel mortgage.
What is the most unusual thing you’ve financed?
Equipment-specialized assets are always interesting. If I had to pick one, I’d pick the fleet of segways.
How many deals would you typically write in a month?
I’d say I’d average between 20 and 25 deals a month. I get a lot of repeat business. In asset finance, most clients are commercial. For example, a construction company has a lot of asset funding requirements. They can require over 10 assets in a year, which provides us with an equal amount of opportunities to assist.
When is a good time to talk about asset finance?
It’s always a good time; we talk about it all-year round. The end of financial year is particularly a good time, as the asset write-off tax incentive and the end of year sales lead to an increase in number of customers.
When and how do you start talking about asset finance needs with a client?
As most of our clients are referred to us, my conversation starts from the get-go. I try to firstly identify the need. I try to understand the business as best as I can. I often go to the premises, see them in person, understand what their structure is, what their goals and objectives are – because, often, business owners are moving in 10 different directions and there’s no clear goal! You want to find out what the clear goal is and how they can get there. Finance is often a requirement to getting to that goal.
What do you look for in an asset finance lender?
Good question. Every lender has their own credit policies, which are important to know. For complex deals, you want to see real “credit sense” from the lender. Brokers tend to obtain customers that aren’t very straightforward. They often don’t [fit with] a prime lender. So, you want lenders that are versatile and think logically. You want someone who can “see” a credit deal and they can work with you.
How do you stay across changes in asset finance?
Obviously, you need to go to PD days... They’re good to learn from, to understand what’s changing in the industry and to understand compliance [changes] – it’s good to stay ahead of that. I do enjoy going to the Connective Asset Finance PD days because it helps us identify new solutions for clients, whether it be a different lender or different product. I find the marketing support is also a great offer from Connective.
What advice would you give residential brokers looking to break into asset finance?
Be aware of the speed of asset finance deals. A mortgage process is a longer process, but asset finance is much faster. A customer who wants to get an excavator or equipment will typically need the equipment to service more work, and that is what produces their income. Any delay generally means they will need to rent the equipment to get by, which is going to cost them more money, so if you take that process and you make it much faster, you enable the customer to pay less in renting costs or increase income.
There’s a lot of people wanting asset finance, so make sure you’re putting the yards. Work harder, work faster, do more hours – that’ll get you better results.
Thirdly, understand the customer. By understanding the customer, you will be able to better understand how you’re going to prepare the credit application to the lender – giving you a better chance for an approval. This means fewer credit applications (which is desirable) and a faster result.
And lastly, rather than trying to become a jack of all trades, you can look for someone who is specialised in asset finance and align yourself with that specialist, allowing you to focus on your core competencies.
First published in The Adviser, 8 October 2019.