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Convenience funding might be quick but can come at a cost…

We’ve all become time poor and look for opportunities to get things done quickly and with little fuss. This has led to increased use of online platforms with matrix driven (no human involvement) approvals and while this can make sense for low value and simple finance needs it can lead to significant cash flow problems with larger capital purchases, business purchases or where there is an accumulation of smaller value asset purchases.

 The convenience trap can affect you in the following ways:

·       For larger capital purchases/business purchases – because this generally involves assets that have more complexity and need for understanding around them, an online approach for finance will rarely work well. This is because it is too challenging to capture any in-depth understanding of the asset itself or its economic or useful life in your business. Any approval here will likely be on terms that suit the financier best and with little or no consideration of whether this makes sense for your business or considering the impacts on cash flow.

·       For smaller asset purchases – where the cash flow squeeze can occur is from an accumulation of small asset purchases. For example, the cumulative nature of 5 small online approved loans funded over short periods can create undue cash flow pressure. This is because online finance is transactional in nature and does not take a holistic view of a business’s funding needs over time.

 So while there is a place for online finance, business owners should be conscious of the cumulative effect of these and that transacting online is limited by predetermined lower value matrix exposure limits, which once exceeded will mean you’re outside of online decisioning credit criteria. Transacting online can deprive you of the ability to engage with a subject matter expert who can assist you to make a sound decision for the well-being of your business and its cash position, which should be a key consideration.

 As a specialist Equipment Financier, who know business and understand equipment we support small to medium sized businesses through our nationwide Network of Accredited Agents who will work with you to structure finance appropriately to match your intended use of it, with a focus on affordability and taking into account your other financing needs.