Save 5% on working capital finance
DO YOU WANT TO SAVE 5% ON YOUR WORKING CAPITAL FINANCE?
This is what recently happened when we worked with one of our customers to do a full strategic review of their finance structures and rates.
This customer had a debtor finance facility with WBC at a rate of 8.5% which they predominantly used for the working capital requirements of their business, day to day cashflow needs.
As our conversation developed, we discussed their annual insurance premium of approx. $100,000 that was coming due soon. In the past they just paid the premium when due from cashflow, utilising the debtor finance facility if need be. We then discussed financing that insurance premium instead of paying for it from your own cashflow, similar to how a vehicle or piece of equipment would be funded through asset finance rather than cashflow.
Insurance premium funding is comparatively cheap compared to other traditional funding methods. The interest rate for a 12 month finance period for this particular premium was 3.5%. Therefore instead of drawing $100,000 from their debtor finance facility at 8.5%, the customer availed of an insurance premium funding facility at 3.5% thus saving 5% on the interest expense over the 12 month period, a significant saving.
The same logic applies whether you have a debtor finance facility, overdraft or line of credit, they will all be a higher funding cost than an insurance premium funding facility.
A major win for our customer at a time when Australian businesses are seeking any way of saving on their expense lines.
If you have annual insurance premiums over $20,000 and are currently paying for them upfront from your cashflow, and if you have bank facilities such as an overdraft or debtor finance, then you could also benefit from an insurance premium funding facility.
If you would like us to review your situation, please reach out to us
Antony@ausfinpartners.com.au Victoria 0413905050
Tom@ausfinpartners.com.au Tasmania 0417679569
Joe@auusfinpartners.com.au Regional Vic and NT 0429990143
Todd@ausfinpartners.com.au Western Australia 0437347066