Who’s A Big Liability To Finance? Industry Insiders Divulge All
How do you deal with a tough client? What’s the most common financial problem? What makes a broker dodgy?
Daniel grills the men of G&H Financial to get some answers.
Get an inside look into how they run their operation and learn about the wacky requests they have had along the way.
For an appointment with G&H Financial call 02 8060 3530.
For an appointment with an AR Cash Flow Product Specialist, please call the office on 1300 652 158.
Watch the video and or read the transcript below
Daniel: How do you deal with a tough client?
Robert: Communication is probably one of the better things when dealing
with a tough client. Generally, the client won’t start out
tough. It’ll be if you don’t communicate with them or you don’t
do the work that they expect you to do. So I just try and avoid
the client getting tough at all.
Daniel: Fair enough. What are some of the most common financial
problems people are challenged with?
Robert: It would definitely be cash flow.
Daniel: I knew you’d say that. Tell me a little bit about . . . what’s
the strangest request that you’ve had?
Greg: The strangest request we had was to finance an instant babe, that’s a
latex girl for a magician in Melbourne.
Daniel: A what?
Greg: A latex girl, a girl made out of latex.
Daniel: Oh, I thought you meant it was actually a real girl, and you
were financing her, but it’s actually a plastic . . .
Greg: Yeah. Pure latex girl used in magician’s tricks. The magician wanted
to fund it about 20,000. That’s the weirdest request I’ve ever
Daniel: And so did you give the funds to him?
Greg: Well done.
Daniel: And what’s the lifetime of one of those latex girls? It depends
on what you do with it, I suppose.
Alex: Yes, it does depend.
Greg: It definitely depends on what you’re doing with it. If it’s used
properly, a lifetime. That was a second-hand one.
Daniel: Okay. So how do you deal with a tough client?
Alex: Give them a timeline generally, because they’re always in a rush and
they always want things done yesterday. So if you can give them
a clear guideline, at least you won’t have expectations not
being met. Under-promise to deliver would be the best way to go,
Daniel: Manage expectations.
Daniel: What do you think the most common financial problems people are
Greg: Definitely cash flow. In any business, cash flow is probably one of
the most common difficulties people have to deal with, and
there’s a lot of different ways that you can deal with that. It
may be as simple as introducing them to a good factoring or
Daniel: Good advice.
Greg: Or it might be as simple as maybe re-amortizing some of their debt.
Daniel: Or call their customers and get them to pay quicker.
Greg: Yeah. That or call Daniel.
Daniel: Let us help you. Why should people come to you, and what will
you do for them?
Alex: Well, people who come to us are generally not the end customer. It’s
generally a referral, a mortgage broker or a lender like
yourself who has a client they can’t [inaudible 3:03]. So the
reason they would come to us is they don’t have the expertise,
and that’s not a bad thing. It’s good to focus on what they’re
good at. We’re not good at mortgage. We don’t do home loans. We
don’t know property. We [inaudible 3:16]. So for people who are
specialists in other fields, just come to us and we will provide
that specialist service, but also a back end office. The client
can see us as little or as much as they want. We get a name or
number. We get them to fill out an application, whatever it is,
and then we’ll process the loan and just get the referrer to pay
his commission and he retains that client and it’s happy days.
Greg: We’re also well-known as particularly breaking down the back end of
the transaction, so understanding the client, understanding what
they need, and then breaking down that information from other
[inaudible 3:54] reports, bank statements, that sort of stuff to
build a good submission for the lender. Generally, a lot of our
referrers see that as a positive because more than likely
they’re going to get an approval, where if they just submitted
it themselves, it might be declined.
Daniel: Yeah, that’s true. So I’m sure you guys know a lot of brokers
and maybe some dodgy brokers you know of. What do they do to
give the industry a bad name?
Alex: Well, you wouldn’t call them dodgy, per se. It’s more that they
submit a deal without building it properly, and then if they get
one decline, they just keep on submitting. Then, after that
third or fourth decline, they might come to us, and what was the
deal on the first submission is now no longer a deal because it
can just taint the deal for the subsequent lenders. They’ll just
think, well, if these three people declined it, how can I
justify approving it to my manager? If it ever goes bad, they’ll
say, “Oh, well, look at all these declines. Why did you approve
this? Obviously, every one else thinks it’s a bad deal.” So
they’re not specifically malicious or fraudulent. They’re just
not doing the best for their client. That’s probably what we
would see the most.
Daniel: As a business person, you would think shopping around is a good
thing to do, right? You’re saying it could be a bad thing to do.
Alex: Absolutely. The more specialized you get, the less you probably can
shop around. There are just not as many options as there might
have been 10 years ago, and even then, you had to be careful
about shopping around with asset clients if you have any
business with that client. When it’s consumer, it’s a little bit
different. If you’re looking for a brand new car, you can do
that. But there’s even a miss on that. So the more specialized
you get, the more valuable the service of a broker is, and if
you shop around, it can generally be quite detrimental.
Daniel: This is an easy question. Who would say is the best factorer
Greg: There are so many to pick from. You would definitely say AR because
they’ve got a flexible matrix. There’s the ability to deal with
the customer direct.
Alex: Coupled with a trade finance package.
Greg: Yeah. There’s only one other factorer that offers that in the
business at the moment, and they’re not as flexible either. But
you’ve also got the ability to amortize equipment if there’s
ever that deal that you need to pull in through a factoring
product or debtor product, you can still say, for example, if
you have a loan where the guy wants to buy a truck, but he
doesn’t have the servicing or something that doesn’t quite fit
in a normal matrix, AR will happily look at that off the back of
a good, healthy debtor book. They’ll still look at amortizing
that truck or whatever piece of equipment that he needs.
Daniel: All true statements. Thank you very much. What’s the most
difficult thing to finance or obtain finance for, and who would
be a big liability?
Greg: The hardest stuff to finance is still luxury goods, like boats,
planes, anything where the lender is taking a big hit through
the GFC. Everyone can still remember the pain. So a lot of
lenders are avoiding those sort of luxury items, especially if
you want to finance it under a business name. That’s a no-no
really about something like that. So that sort of stuff, it goes
without saying, is difficult, but anything that’s also very
little servicing, but it’s new equipment that’s going to provide
good stable income going forward, those projections aren’t
really considered as valuable any more in the whole scheme of
what they’re looking to fund or in the whole assessment scheme
that those projections could be pie in the sky, really, with the
instability in the economy and stuff. We find if you couple that
with maybe a contract funding or something like that, that works
Daniel: So based on what you’re telling me there, if it floats flies
supplies or the latex girl you can obviously finance.
Alex: Yeah, if it’s generating income.
Daniel: That was generating income. So it’s just boats or flies.
Alex: Not all latex model women.
Greg: There’s always a company that’s going to fund something, so there’s
always a business out there that’s going to fund it, and really
that’s another incremental part of our position in the
marketplace. We understand those lenders, and we understand the
marketplace really well. So we know where, say, a large boat
would be positioned in the marketplace. We know how it needs to
be submitted, and we know what the factors are that that
particular lender is looking for. It’s really just
straightforward matrix lending, but having that knowledge makes
the difference. So any and all goods can be hard to fund, but
having that right knowledge and having the right lenders makes
Daniel: If I’m a client and I want to put myself in the best light to
come to someone like yourselves, what do you guys look for in a
Greg: We’re definitely looking for a relationship.
Alex: Sometimes we have clients who they believe they’re doing us a favour
by not telling us about this, that, and the other. But we always
find out, and we make sure we find out because if it ever goes
to a lender and there’s not enough disclosure, the client just
gets declined straightaway.
Daniel: That comes back on you as introducing it.
Alex: Yeah. We’re here to help them. We just need to know all we can about
each transaction, and we’ll do our best job. There’s no point in
the client ever holding back or trying to tailor, which is what
sometimes they do. We get through it. It just takes longer for
them, which is worse for them.
Daniel: Yeah. Guys, thank you very much.
Alex: No worries.
Greg: Thank you.
Robert: I don’t know how to do this
Alex: I never knew how low it could go.