Business and Finance

Finance a stronger tomorrow

Finance is essential for the success of any business. As a new calendar year approaches, the finance specialists at Moody Kiddell & Partners have drawn up a checklist of key factors you should consider while planning to achieve your growth aspirations for 2022.

Financial expertise and product planning can give your business the flexibility it needs to plan and generally expect growth, with the right foundations. Whether you are looking to grow your business or to continue to fund current operations, it’s always good practice to have additional finance approvals available to capture new opportunities and cover your working capital. This knowledge will allow you to bid with confidence for machinery that allows you to tender for the larger job contracts. Reach the stronger position of a planned growth mindset to explore capital purchases before the opportunities occur, rather than rushing with a reactive approach.

Have you looked at an excavator with a specific attachment or needed to place a large stock order for pipes but been unsure of the cashflow required? Asking ‘what do I need to facilitate those orders to happen seamlessly?’ is a question better asked sooner rather than later. Finance foundations allow you to know what you can do to achieve your growth aspirations and goals. Have the figures sorted so that you can engage with the opportunities in the market as well as having the peace of mind to tackle them with your team.

Every business is different, and it is important that the finance you obtain is suited to your specific circumstances. At Moody Kiddell & Partners, they tailor their financial products so that you can access the finance your business needs to achieve its growth aspirations. They do this by working efficiently through these key factors:
• Debt horsepower or diversity with current lending partners
• Pre-approval of your financed amount
• Funding and debt requirements
• Knowledge of the balance sheet
• Borrowing capacity
• Key financial trends relevant to your business
• Financial ratios (interest cover, leverage, debt)

A detailed evaluation of your business’s financial position will give you a clearer picture of your financing needs, including your appetite for risk, opportunities for appropriate leverage and capital expenditure.

Your business may be capable of expanding faster than you originally expected after gaining accurate financing limits and pre-approvals.

MKP Equipment Line is their financing tool tailored to the needs of clients for products including earthmoving, truck buckets and more. By aligning your existing plant and equipment closer to their true effective life, MKP Equipment Line can strengthen cash flows, build opportunities for growth, and uncouple your personal assets from your business.

MKP Equipment Line borrows against the true working value of your assets to unlock additional equity in your business. This results in lower monthly financing payments, allowing you to purchase new equipment and fund business improvements, while giving you the flexibility and peace of mind that stronger cash flows provide.

MKP Equipment Line also gives you the confidence to tender for new and larger contracts and finance business critical items including:
• Light commercial vehicles
• Trucks and trailers
• Earthmoving and mining equipment
• Arbor and woodworking equipment

Earthmoving Contractor boosted cash flow by using existing equity in plant and equipment.

A well-established (15yrs+) civil earthmoving contractor required finance of $1,050,000 over 48 months. MKP assisted with the goal to provide working capital, secured against business plant and equipment to allow a much larger pipeline of work. Their client was seeking a facility from a financier who understood the true value of the equity in their well-maintained earthmoving equipment, including excavators, bulldozers, graders, water trucks and wheel loaders.

As is the case with many earthmoving contractors, the largest asset in this client’s business is the equity in their plant and equipment, and they were looking to leverage this equity to reinvest back into the business. Cash flow mismatch is a common challenge facing many civil and earthmoving contractors when commencing new projects. It is magnified for contractors by the requirement that they also pay bank guarantees and retentions up front. Traditionally, contractors have established and utilised facilities such as an overdraft to plug this working capital gap. Mainstream financiers will typically secure such a facility with a GSA (general security agreement) over the trading and asset holding entities within a group structure, in addition to obtaining mortgages over the residential and commercial properties held by company directors.

MKP have developed a credit product that recognises the true equity in a contractor’s plant and equipment. Leveraging against this value, they were able to create working capital to help the business grow, while giving the customer the flexibility of stronger cash flow and peace of mind by uncoupling owners’ and directors’ personal assets from the business. The payout figure for these assets was $550,000, and when evaluating this against day one, 80 per cent advance of orderly liquidation value, MKP Finance was able to provide the directors with a working capital payment of $500,000 into their business bank account. The amount financed was $1,050,000 ($550,000 payout to financiers and $500,000 paid to the business as working capital). The loan term was 48 months, with no end-of-term balloon. In this new finance facility, the client’s monthly payments were equal to their repayments on their existing facilities, with the added benefit of having $500,000 of working capital available in their bank account.

At Moody Kiddell & Partners, they pride themselves on building long term partnerships with their clients. Your success is their business, and in every step of the relationship MKP invest their core values of Integrity, Service and Performance.

Make sure your business has sufficient working capital over the holiday break or secure your project pipeline with access to the right finance facilities to meet your business goals.

Expert knowledge. Immovable support. That’s what it means to be Partners with you.

Get in touch today for a no obligation discussion to finance your next purchase by calling 1300 000 657.

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