As co-principal sponsors of Accountants Daily’s inaugural Finance Day, Assetline Capital and AltX took the opportunity to learn more about the needs of Australia’s accounting firms and their clients. Here are some key take-outs from the event.
We’re operating in uncertain times
For Australian small businesses, funding is becoming more challenging to secure while those with capital to invest have just seen $80 billion wiped off the ASX in a day recently.
As interest rates start to climb more quickly than anticipated less than a year ago, many small business owners started feeling the pressure on cash flow. This comes on top of the challenges of operating during pandemic lockdowns.
“Quite a lot has changed in the economic backdrop,” said Assetline Capital managing director, property lending, Paul Munt during his welcome address to attendees.
“We’re now seeing a lot of inflationary pressure. We’re also seeing interest rates on the climb. The hangover from COVID is still real, and of course there’s supply chain issues.”
At the same time, he said, it’s becoming harder to access credit from traditional mainstream banks.
“I was chatting so some brokers here today, and they tell me approval turnaround times at the moment are hindering the opportunities for small and medium businesses to grow,” he said. “That’s why non-bank lending’s share of the market is continuing to increase. Non-banks are more agile and are able to find equitable solutions for small to medium business owners.”
Investment income challenges continue
On the flip side, rising interest rates may be good news for business owners with positive cash holdings, or those exiting their business with hard-earned capital.
However, bond and term deposit rates are still struggling to keep pace with inflation.
“There are a lot of headwinds out there for investors. How can you, as accountants or advisers, provide certainty of returns for your clients’ investments?” asked AltX director David Fizgibbon during his address, noting the S&P 500 had just tumbled to a new low for the calendar year.
AltX gives wholesale investors access to private debt deals secured by first mortgage, providing a rare balance of capital protection and stable returns. It’s for this reason a large percentage of AltX’s investors are retirees and SMSF trustees.
“In these uncertain times, real estate debt provides investors with security and regular income with very low levels of volatility,” David said.
Expanding the focus of trusted advice
Accountants know the financials and operations of their clients’ businesses as well as they do – and sometimes even better. This puts them in the ideal position to add more value to the relationship by guiding clients through a broader range of options.
“Accountants play an increasingly important role in helping their business navigate solutions to cash flow or funding issues,” said Paul.
They also act as a trusted adviser to high net worth investors and SMSF trustees, and can complement a wealth adviser’s guidance on opportunities to diversify into alternative asset classes.
For example, purchasing a property is a common trigger to set up an SMSF. Bricks and mortar investments are capital intensive, relatively illiquid, and hard to diversify. However, investing in private debt can provide the security of a bricks and mortar asset with a shorter-term investment timeframe.
Small businesses need a dependable partner
During the morning’s panel Dr Craig Latham, Australian Small Business and Family Enterprise Ombudsman (ASBFEO), emphasised the importance of small businesses to Australia’s economy.
“They contribute $422 billion to Australia’s GDP and employ 4.7 million people,” he said.
The ASBFEO’s assistance data provides some insight into the impact of COVID, floods and droughts on Australia’s small businesses over the last few years. “As we came out of lockdowns, payment disputes went through the roof,” he said, noting his office received over 7,000 dispute queries last financial year.
In a prelunch session, Xenium’s Todd O’Neill said accountants are “the last bastion of trust in financial services”.
“It’s hard to build a business like that, to be a great accountant while also providing broking, financial planning and all the additional services we’re discussing today,” he said.
That’s where being part of a proactive, like-minded network of brokers, financial advisers and lending partners can add tangible value.
Paul noted Assetline Capital’s commitment to delivering on their promises, having recently pledged the Banking and Finance Oath to ensure everyone in the business is accountable for acting with integrity.
“Not all non-bank lenders are created equal. We provide direct access to a decision-maker, same-day response, and a trusted sounding board for ideas and challenges,” he said.
“We see really strong client outcomes when we work closely with the accountant, the client and the broker. And if we get those things right, small and medium businesses can continue to prosper and grow.”
To learn more about opportunities to grow the value of your accounting firm with non-bank lending and private debt investing, you can:
- Download the Assetline Capital Accountant’s Guide to Non-Bank Lending
- Download AltX’s Adviser’s Guide to Private Real Estate Debt Investing.
