Three Ways to Improve Your Cashflow

You may have noticed, due to the impact of the coronavirus, that we have recently been sharing with you some resources to help you look more closely at your finances with the aim of improving your cashflow in these challenging times.

No doubt reducing your operating costs are a great way to improve your cashflow, with refinancing being a simple way in which you can do so.

Here are two refinancing options that we can help you with, and a third financing option, that can help you improve upon your cashflow.

Give us a call on 1300 322 092 to discuss. We are happy to do the heavy lifting to help you maximise your cashflow.

1. Refinancing all your vehicles!

Cars, Utes, Vans

No matter what stage you are at with your vehicle loans, it is definitely worth looking into refinancing them as a simple way of reducing your monthly outgoings.

2. Find a better interest rate!

Some good savings can definitely be made here.

Whether you want to save money on your mortgage, pay off your loan sooner, get cash out from your property, or consolidate debt, refinancing your commercial and/or residential property loans may be able the way to go.

3. Reduce your energy bills!

“…our reduction in energy costs is around 70% pa”

Our business has two buildings and wanted solar panel installations put on both. Ecolease were excellent to deal with and made the financing process simple and fast and our reduction in energy costs is around 70% per annum since the system was turned on.​

The Sign and Badge Centre, Bayswater, Victoria

August 3 Things E-Newsletter 2020

1. Great News for Small Businesses – JobKeeper extended for another 6 months!

This is how it works in a nutshell…

Eligibility is now based on showing a 30% fall in actual GST turnover.

In addition, from 3 August 2020 the relevant date of employment will move from 1 March to 1 July 2020, increasing employee eligibility for the existing scheme and the extension.

The extension will run from 28 September 2020 to 3 January 2021 and will be issued in two stages.

From 28 September 2020 to 3 January 2021: 

Payment will be reduced to $1200 per fortnight for staff who worked a minimum of 20 hours per week in the four weeks prior to 1 March 2020 or 1 July 2020.  

Payment of $750 per fortnight applies for all other eligible staff

From 4 January 2021 to 28 March 2021: 

Payment of $1000 per fortnight for staff who worked a minimum of 20 hours per week in the four weeks prior to 1 March 2020 or 1 July 2020.  

Payment of $650 per fortnight applies for all other eligible staff

For more detail please talk with you accountant or download Jobkeeper Fact Sheet here.

2. Need another pair of hands?

New equipment could do the trick

With many businesses running with fewer staff, some business owners are finding their working week is longer than ever.

Labour saving equipment and technology is more critical than ever to maintain productivity and profitability.

Over the past couple of months, we have heard firsthand from our amazing customers how important the right equipment is for business – especially now. New technology is allowing business to produce more with less. 

Here are a few questions to get you thinking about how new equipment may help your business:

  • Will equipment produce my product quicker, easier, more cheaply, reduce waste? 
  • Does it give us more control over quality and production time? (especially true if you are outsourcing)
  • Will purchasing the equipment open my business up to new streams of income, new markets? 
  • Does it allow me to produce new goods that my existing customers are demanding?

If you answered YES to any of these questions now may be a good time to buy. 

Any current downturn in business may allow you time get the equipment installed and staff trained so that when business ramps up (and it will), you will be ready.

The price of the equipment (and how you intend to pay) is the final consideration. Focus should always be on the value the equipment brings to your business. 

Financing the equipment can help because you only have to come up with a monthly repayment rather than a large lump sum. It also allows you to hang on to cash, essential in the current environment. Cash should be spared for operational purposes rather than purchasing equipment where possible.

With the additional benefits of lower rates and tax deductions from the Instant Asset Write Off scheme now is a good time to consider. We suggest you seek advice from your accountant regarding your individual circumstances

3. Extend Your ‘cash’ Runway.

Cashflow forcasting is a powerful tool

Cashflow forecasting is a powerful tool to help you beat COVID, keep your business alive and help you prosper on the other side.  

Stuart Donaldson unpacks survival and revival methods you can implement in your business in this thirty-minute webinar we aired back in May. An absolute must watch for any business owner but particularly if your business is being negatively impacted by COVID.

PLUS We are giving away free 13 week and 12-month Cashflow Templates and guide for you to start forecasting.

$150K Instant Asset Write Off

NOW IS THE TIME TO BUY

Many businesses are taking this quiet period to refurbish, update technology and pivot with new goods and services.

This may mean you need new equipment and now is a good time to buy.

Why BEFORE June 30?

  • Seriously good deals on offer for vehicles and equipment
  • Instant Asset Write Off (IAWO) drops to $1K AFTER June 30
  • Record low interest rates

Key points to know about IAWO:

  • You can write off 100% of eligible assets that cost up to $150,000 each
  • Equipment to be purchased and ready for use by June 30, 2020
  • For businesses with up to $500 million turnover
  • After June 30, the IAWO threshold drops from $150K to $1K

How does IAWO help me?
In a nutshell, it means you pay less to the ATO, meaning you keep more cash in the business. It also means that any equipment you purchase now effectively costs you almost 30% less than what you will pay for it after June 30.

How can Ecolease help you?
Fast Simple approvals up to $150k with no financials*
We live and breath equipment finance and our expertise is more important than ever in these COVID lending times.

Can I finance it and still qualify?
YES. Speak to the Ecolease Commercial Finance Experts to learn more.

Stay Strong,
Team Ecolease 

* Specific Credit criteria applies.

Please note, it is important that you speak with your accountant when considering purchasing equipment and in utilising the benefits of IAWO within your business.

Managing your business’ cashflow in these Covid-19 times

To our amazing Ecolease community

In the past couple of weeks we have been asked ​by a number of clients about the Government Guaranteed Small Business loans to help business with cashflow during this crisis (known as the SME Guarantee Scheme) .

In this COVID Bulletin we set out to explain how the government guaranteed loan works, how you can apply, and also offer other options that may work for your business at this time.

Remember, if you are considering using these options, it’s essential that you talk with your accountant and key stakeholders.

1. Government backed Loans for Businesses (SME Guarantee Scheme)

Under the Scheme, the Government is encouraging banks and other eligible lenders to support small businesses with unsecured loans.

Why is the government backing important?

It means that small business owners do not need to use their home or investment properties to secure funding for their business.

What are the key points?

  • SMEs with a turnover of up to $50 million will be eligible to receive these loans
  • Maximum loan is $250,000 per borrower
  • The loans will be up to three years, with an initial six month repayment holiday
  • Rate circa 4.5% p.a
How you apply?

The major banks have information on their websites and a hotline to call. They will require your financial statements and tax returns for 2018 and 2019, cash flows and other information.

You can call your bank direct or feel free to call ECOLEASE to walk through your options. One thing we can guarantee is that there is someone at the end of the phone!

2. Raising cash against property

Why would you consider this option?

The major benefit here is the flexibility that comes with mortgage backed loans and lines of credit. By extending the term for longer than 3 years there is less pressure on current and future cash flow.

How you apply?

You can call your bank direct or feel free to call David at Ecolease for assistance.

3. Unsecured loans/overdrafts and fintech options

Why would you consider these options?

There are a number of lenders that offer loans and overdrafts with less complicated application processes. You may consider these options if you don’t have completed financial statements.

Rates vary from 12.95% and upward for loans up to $250,000.

How you apply?

You can call your bank direct or feel free to call David at Ecolease for assistance.

Covid-19 Deferred Loan Repayments Update

Hello out there to our Ecolease community,

It has been a bizarre and stressful couple of weeks for many of us, as we grapple with the impact of COVID19 on our businesses and work places.

Things are changing daily, and this has been the first chance we have had to message you.

Please view our video where I give an update of how we, and our lenders, are handling your enquiries. I also provide directions to those who may be considering assistance with their loan repayments. 

Below is a list of the Government Economic Response to the Coronavirus and links to their Fact Sheets. Importantly, please remember the best place for advice and information in relation to your business is with your accountant.

Lastly, a reminder that we are open for business and continue to assist with any equipment, vehicle and property finance needs.

Deferred Loan Repayment Information

Keep abreast of what our lenders need you to do.

A COVID-19 mortgage deferral won’t affect your credit rating.

The major banks have announced that any Australian who is granted a six month deferral on loan repayments on their mortgage or other credit products, such as a credit card, will not have their credit rating affected as a result of that deferral, provided they were up to date with repayments prior to COVID-19

Australian Government Fact Sheets

Cash Flow Assistance for Businesses:

Temporary relief for financially distressed businesses:

JobKeeper Payments - Information for Employers:

Supporting businesses to retain jobs:

Early access to superannuation:

Delivering support for business investment:

Income support for Individuals:

Supporting the flow of credit:

Payments to support households:

March 3 Things E-Newsletter 2020

1. Get your equipment delivered now and don’t pay until June!

Deferred Repayments for Rental Facilities!

If you were holding off purchasing that piece of equipment for your business, we may have found the right solution for you!

Very much so, a lot of our day to day conversations have been focused around the current Covid-19 situation. As a small business ourselves, this has been on our minds too.

We want to reassure you that Ecolease is still open for business. We are here to help. 
We recognise that many businesses still need vital income-generating pieces of equipment. So we have organised with one of our lenders the option to finance your equipment with a 3 month payment deferment.*

This means that you can get your equipment NOW, and not have to make any repayments for the first 3 months. 

*Subject to credit approval and criteria. Applicable for Rental contracts only.

2. Support Options in Times of Hardship

LET US KNOW IF YOU NEED ASSISTANCE

With the devastating bushfires earlier in the year and now with the Covid-19 situation many small businesses have been impacted. 

A range of our lenders have put in support measures to help these business during these difficult times. 

If you are experiencing hardship due to these circumstances, we encourage you to please get in touch with us so that we can speak to our lenders about what options are available to you**.

Our thoughts are with everyone who has been, and continues to be affected during these challenging times. We are here to support you.

**All cases of hardship will be assessed by the lenders on an individual basis and certain criteria will apply.

3. Save with Solar!

At Ecolease we have helped various clients to save on their energy costs through financing solar power installations, irrespective of whether the premises are leased or owned.

Most clients, once they have installed solar, find that the savings they make on their energy bills more than offset the cost of the installation and is cash flow positive.

Email Us your last 3 commercial property electricity bills and we will review them so that you can get on the path to saving $$$.

Instant Asset Write Off Increased to $150K!

Instant Asset Write Off increased to $150K

STAY STRONG AND MAKE THAT EQUIPMENT INVESTMENT

If you were holding off purchasing that shiny new toy for your business, Scomo has just given you a reason to stick with the plan!

The federal budget announced today a stimulus package to support small business investment. 

  1. *Increase the Instant Asset Write Off to $150k untill June 2020
  2. *A new investment incentive allowing an additional 50% accelerated depreciation to June 2021

How can Ecolease help you?
Fast Simple approvals up to $150k no financials
Most equipment types

Can I finance it and still qualify?
YES. Speak to the Ecolease Commercial Finance Experts to learn more how you can benefit.

CALL US NOW ON 1300 322 092

*This needs to be passed in Parliament March 23 but is safe to say this element is a done deal with Labor advising it is inclined to support the package.

November 3 Things E-Newsletter 2019

1. Need new kit?

Here’s a strategy to offsetting the loan cost through installing energy saving technology!

If you haven’t already installed or thought about Solar to reduce your energy bill costs, you really should. In many cases the smaller energy bill plus the cost of financing the energy saving technology is less than the old electricity bill, leaving you with some extra cash that could be put towards funding that new piece of equipment you’ve been wanting.

The payback period is very short and we are on track to achieve two thirds cost saving per annum.”
Peter Anargyros, Managing Director, Created to Print, Adelaide

“Our business has two buildings and we wanted solar panel installations put on both and our reduction in energy costs is around 70% p.a since the system was turned on.”
The Sign and Badge Centre Bayswater, Victoria.

So remember, the Sun will never send you an invoice!

Whether you own or lease your premises, Ecolease can help finance your installation and we even have our own Solar expert consultant who can assist evaluate the likely savings you can make with solar for free, so if you would like a free evaluation contact us now.

2. Thinking new car?

MAKE SURE YOUR COMPARING AN APPLES WITH APPLES QUOTE

When can an interest rate of 5.5% mean lower monthly repayments than another quoted interest rate of 2.99% when they both have the same loan period and payout balances?

Simple really, at Ecolease we always quote the effective rate not the base rate. The effective rate reflects the true cost of the loan, including all interest and fees, and provides you with a true comparison against other financing options. We like to call it our “Apples with Apples” quote! 

The base rate, on the other hand, is often quoted to entice people. It is the net rate BEFORE any costs and fees have been amortised into the loan. It’s for this reason, we often get asked:

How come your repayments are lower, yet your interest rate is higher?

The best way to get around this, is to always ask for a quote to include the repayments and terms, rather than asking just for an interest rate.

Based on a competitve effective rate of 5.5%, the following repayments apply:

New car cost:             Monthly repayments:*
$50,000                       $806 per month
$75,000                       $1209 per month
$100,000                     $1612 per month

*Monthly in advance based on 60 month term with a 20% balloon

So next time you are looking to buy a new car use this as a guide and always make sure you ask for what THE EFFECTIVE RATE is and check with us first to make sure you are comparing Apples with Apples.

3. How healthy is your business?

End of calendar year, when business is typically quieter, can be a good time to reflect on how your business is performing. Here are four key ratios that can help you understand better how healthy your business really is.

1. Revenue KPI the EBIT margin ratio

Every one of us in business knows what our Gross profit ratio is but the EBIT (earnings before interest or tax) margin ratio is a percentage that shows you how much you earn after deducting all expenses.

Formula:
Revenue – Cost Of Goods Sold (COGS) – Op expenses = EBIT

Example:
$1,000,000 in revenue
$500,000 is the COGS
$250,000 all other expenses
$1,000,000 – $500,000 – $250,000 = $250,000 which is 25% of revenue

A 25% profit margin, meaning twenty five cents of each sales dollar is remaining for your business. The other 75% of earnings go toward expenses.

Most businesses aim for having margins above 25% but standards vary with different industries

2. Liquidity KPI the Acid Test Ratio

The Acid Test Ratio (sometimes called the Quick Test) is used to measure short-term liquidity. Liquidity is your business’s ability to pay off current liabilities (debts you must pay off within 12 months) with current assets (items your business has that can easily be converted into cash within 12 months), not including inventory.

Formula:
Cash + Marketable Securities + Accounts Receivable ÷ by current liabilities

Example:
You have $8,000 in cash,
$0 in marketable securities,
$3,000 in accounts receivable.
$4,000 in current liabilities,
$8,000 + $0 + $3,000 ÷ $4,000 = 2.75

Your Acid Test Ratio is 2.75. This shows that you have $2.75 in assets per $1.00 of liabilities, which means you have enough to meet financial obligations.

A quick ratio of 1.0 or more means you are able to meet your financial obligations. 1.0 means that you have $1.00 in liquid assets per $1.00 of current liabilities. If you have a score below 1.0 it means you are unable to pay all your liabilities.

3. Investment KPI the ROI (Return On Investment) Ratio

The ROI Ratio shows you how much your company gained from an investment you made. ROI is a percentage and helps you determine which investments were successful and which weren’t.

Formula:
Net gain from Investment ÷ by cost of Investment X 100

Example:
Let’s say you want to measure the ROI of your marketing strategy. You have $9,000 in gain from investing in say Google Adwords advertising, and your cost of investment was $5,000:

Net gain $4,000 ÷ $5,000 = 0.8 x100 = 80%

In this example, you made a good marketing investment since 80% is high.

4. Cash Flow KPI the Debtor Day Ratio

This is a ratio that measures how efficiently a business is collecting receivables.

Formula:
Average trade receivables ÷ annual credit sales X 365 days

Example:
A company has average trade receivables of $2,000,000 and annual sales of $15,000,000

$2,000,000 ÷ $15,000,000 X 365 = 48.66 meaning that its average Debtor Day Ratio is 48.66 days.

There are a number of ways to reduce debtor days. A key one is by having credit policies and procedures in place, including taking steps to approve customers before granting payment terms, having clear invoicing procedures and following up quickly when invoices are overdue.

October 3 Things E-Newsletter 2019

1. The Four C’s of Credit

INTRODUCING THE FOUR C’S

Ever wondered why the banks and finance companies ask for the things they do when assessing your finance application?

At Ecolease, we live and breathe small business finance. Our role is to pull together your finance application, like joining the pieces of a puzzle, and presenting it in a clear and concise manner to our lenders to ensure a successful outcome.

No matter how big or small, or whether we use your financials or not to get your finance approved, there is a framework that lenders apply when deciding whether or not they are going to part with their cash and invest in you. It’s called the 4 C’s of Credit.

So next time you are applying for finance the summary below may explain the rationale behind what we may be asking you for.

In Summary the 4 C’s:

1. Character: It’s about who you are, your reputation and integrity when it comes to repaying a loan

2. Collateral: What is the asset being financed and what’s it’s value now, and in the future

3. Capital: This is about your financial position and any funds you have behind you and in your business

4. Capacity: Is all about the numbers and ensuring you have the ability to repay the loan

READ MORE…

Character
Before lending, banks and finance companies want to know who they are lending to. This is all about your reputation, integrity and willingness to repay debt.

The things lenders consider include your credit history (past loans and repayments), your savings history, and general stability (for example the length of time you have been in business). There is a much bigger focus on your credit history these days and the new positive credit reporting system (more about this later in another 3 Things Edition).

Collateral
Collateral refers to the type of asset that is being financed (property, land, equipment, vehicle). It’s what helps secures the loan.

For example, in equipment finance, lenders rate Cars, Trucks and Yellow goods (such as forklifts) very highly. This is because there is a good second hand market and these assets hold their value well (particularly yellow goods).  So, if things were to go bad, the lender can quickly sell the asset and recoup some of their cost.

Capital
Even if you’re not offering them as collateral, having cash or assets within your business & personally provides lenders with some level of comfort that even if the worst happens, you will be able to draw on them if needed. It also is an indication of your business profitability over time and also your savings history.

Capacity
Also known as serviceability, this is perhaps the most important factor of all in assessing your loan application; whether or not you’ll have enough money available to cover your repayments.

To assess this, the lender will look at your business profits and cash flow projections, as well as your regular expenses (rent, wages, insurances, utilities, etc.) and any other existing obligations such as vehicle or equipment finance.

There are a number of finance options where we don’t need to go through this process, and this is where we can help you work through your options.

2. HUGE savings to be had on your energy bills

A SIMPLE FORMULA

At Ecolease we have helped various clients to save on their energy costs through financing solar power installations, irrespective of whether the premises are leased or owned.

Most clients, once they have installed solar, find that the savings they make on their energy bills more than offset the cost of the installation and is cash flow positive.

Here’s a simple way to look at how savings can be achieved and whilst not specific to every business provides a guideline.

  1. Most SME businesses in all likelihood require no more than a 30KW solar system
  2. A 30KW system generates about 120KWh of power a day, on average over a year.
  3. Approximately this could provide about $2,000 per month in power cost savings if the power is self consumed.

    OK, so far so good, but how much is the installation and what are the financing costs?

  4. Our experience tells us that the cost of installation equates to approximately $1,000 per KW of solar generation installed, so a 30KW system would cost approximately $30,000 (net of the STC discount that most installers would apply at time of quoting).
  5. The cost of financing a 30KW system installation would be approximately $600 a month (depending of course on length of term).

So, in this scenario, add $600 a month to operating costs and save approximately $2,000 a month in power costs, a net cash positive outcome of $1,400 a month which increases at the end of the finance term as the loan is paid out and in all likelihood power costs generally increase (solar panels have a shelf life of around 25 years).

Please note the above is an example based on industry averages and our own experience but here’s what one of clients had to say who installed solar.

3. Nationally, property values continued their recovery in August

If you are thinking of buying or re-financing property, is now a good time?

Home values increased by 0.8% in August this year with housing values in five of the eight capitals increasing and over the last quarter the national change in home values has seen an increase of 0.6%.

This recent growth appears to be a continuation of the trend throughout the year where value falls have been losing momentum and have now started to rise according to property market analytics source Core Logic.

As can be seen by the below index, the national change in values across all areas on an annual basis is still -5.2% but the trend appears to show that property prices are recovering consistently and as we begin to enter the property “Spring sales season”, if you are considering buying and or refinancing, now is a good time to start the planning process and Ecolease can help.

We can advise you of the sort of information you will need to show in your financials and identify the best structure for your loan according to your circumstances.