PLEASE TELL US ABOUT THE NATURE OF YOUR BUSINESS
I specialise in asset finance, predominantly looking after agriculture, forestry, transport, and construction (craneage, earthworks, underground services).
I’m a partner in CrediFlex – one of New Zealand’s largest and longest standing commercial finance broker networks. Crediflex is accredited with an extensive list of commercial and consumer lenders in New Zealand. We value the relationship we have with our lenders and work closely with them to deliver customised product to our client base.
Our core value proposition is that we are an independent finance specialist to our clients, working hard for them to obtain the funding they need. We structure funding lines to fit the business’ requirements and will sometimes spread their funding mix. This ensures our clients have the right mix of funding lines to meet their growth and capital replacement requirements into the future.
Typically we match our clients business / industry along with its stage in its business life cycle, and its capital requirements / asset mix to one of our lenders’ that is the best fit for that client at that time.
Not all lenders are the same, just as not all customers are the same – lender appetites and customer demands vary considerably.
HOW DO YOU VIEW THE CURRENT LENDING LANDSCAPE?
Challenging but also very positive. With many businesses heavily focused on their existing and new work we are often left to piece together the information required to complete a successful funding application.
We are seeing more and more legislative hurdles to overcome. What was once a simple loan application can now be quite complex to meet all the changing legislative requirements, let alone changing bank appetites.
We work in an interest rate range driven by the risk profile of the industry/client/proposal so it is imperative we obtain the correct information to get the best product we can for our clients.
WHAT ARE THE BIGGEST CHALLENGES AND OPPORTUNITIES YOUR CLIENTS ARE FACING IN THE CURRENT CLIMATE?
We work in what we call “the productive sector” – which has a high capital asset requirement. This sector of the economy has been strong for some time now. The New Zealand internal economy is much stronger than some would have thought it would be 12 months ago – civil construction, forestry, transport are experiencing strong demand and growth. There is a fantastic opportunity for well structured businesses to take up the extra demand in this economic climate. There seems to be more work than there are contractors and people to do it. A number of weaker businesses are no longer around which takes a bit of price competition off the table.
HAVE YOU SEEN GROWTH IN DEMAND FOR FINANCE, FOR ANY INDUSTRIES?
Civil construction and forestry. The issue with forestry is that some lenders do not understand it very well – it is often perceived to be a bit boom and bust. Lenders sometimes vary their appetite which can make life a bit tough for us but there is a lot of opportunity there.
I personally don’t work in the hospitality / accommodation space too much. 12 months ago we thought hotels and motels were going to be heavily affected, however the Government is now one of the industries biggest customers (due to Managed Isolation). This is guaranteed money so many have actually come out of this alright.
WHAT VALUABLE LESSONS HAVE YOU OR YOUR CLIENTS LEARNED, AS A RESULT OF COVID-19?
It’s a really hard question because it varies. One thing the clients have learned is time off is actually quite good. Construction companies giving their staff time off to have a proper Christmas in the middle of the busiest time of their season, which starts in October and runs through until the end of April. This year most of my clients took a full two weeks off, everyone just shut down because they see the value in giving staff time off, then come back fresh and ready to go.
A lot of companies have also used the opportunity to restructure.
We have a skills shortage in New Zealand. For example, if a lot of baristas were put out of work due to COVID, it’s unlikely that they could then fill the role of heavy machinery operators – generalising of course. Whilst there were people dislodged, and jobs available, there was and still is a skills mismatch.
A lot of people have relocated back to New Zealand but there is some fear that as soon as the Australian border is open, they’ll jump across there because it’s a bigger market with other opportunities.
I’d say the majority of people just sat back and assessed what they did and didn’t need. Most businesses cash flows have come out of this alright, the government has provided a fair bit of stimulus.
WHAT WOULD A TRANS-TASMAN BUBBLE DO FOR BUSINESS?
It would allow tourism both ways, as well as the Aussie dollar to come into the country. I don’t think it would really do anything for the sectors I look after. However it would be massively beneficial for hospitality/tourism. Tourism is/was New Zealand’s biggest income earner. It wouldn’t help with the skills shortage though as Australia pays more and typically you don’t get a lot of Australians coming this way to live and work, it’s usually the other way around.
WHAT PROBLEMS HAS APRICITY FINANCE SOLVED FOR YOUR CLIENTS?
Apricity Finance’s core business works quite well and is different to competitors for the clients we introduced to Apricity Finance – it’s easy once you get used to it. The niche that Apricity Finance has works well. My client (construction industry) was growing quite quickly but they didn’t own a home therefore banks were not that keen to provide a working capital facility. That was and is an ongoing challenge for them but they have corporate clients which meant Apricity Finance could step in and provide assistance, which works quite well. They use it in conjunction with a working capital facility they have.
It’s a specialised proposition and when it works for you, it’s great. It’s quite simple and easy for those that need it. The flexibility to be able to use it when you need it is also attractive.