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  • #966382
    siringo
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    • Total posts: 39
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    I’ve got a client that is looking at purchasing new IT gear.

    I want to be able to provide this service to them but I have a few questions I hope someone may be able to help me with as I’ve never had to do this before.

    I’m a one man show sole trader and only been running for 6 months. I don’t have sufficient funds to purchase the gear and then wait 30-60 days for my client to pay me back. For this reason, I’m looking into finding a reputable finance broker for them to deal with.

    I understand that if the broker obtains finance for their purchase everything is OK and my client can go ahead with the purchase, but when it’s time to pay the supplier, how does that happen?

    Please bear with me, I have no idea what to do here.

    Maybe the easiest way for me to ask my question is to write down what I think might happen and hopefully someone can either correct me or tell me I’m correct.

    Here’s what I think I need to do.

    1 – Establish an account with a supplier so I can source the equipment my client needs. Setup a 30 day credit account with them (as an example).

    2 – Help my client obtain finance in whatever way

    3 – Once my client has finance, place the order with the supplier

    4 – Once I’ve placed the order, invoice my client for the amount of the order

    5 – Hope my client pays me before I have to pay the supplier

    Does that sound like the way things would work?

    I have a few other questions.

    – Would the financier my client uses, pay the supplier?
    – What do I do if my client doesn’t pay me before I have to pay the supplier?
    – Would a large IT supplier give a sole trader (non GST registered) a 30 day credit account?
    – Can anyone suggest a reputable Finance Broker?

    Thanks for any help.

    #1017858
    timlea50
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    • Total posts: 19
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    Hi Siringo,

    There are a number of options to consider for your client, and it depends upon a number of different things to know which solution might be right for them:

    1) the corporate structure of your client- are they pty ltd or sole trader/partnership (P/L gives us most options)
    2) the margins they are working to – typically hardware can have very low margins so cost of finance can be critical…..
    3) Is the transaction a one-off or is it likely to be a series of transactions
    4) the age and credit history of your client

    The various solutions can be :

    a) inventory finance – where the inventory financier pays for the product from the supplier and your client re-pays the financier in 30, 60 , 90 days – credit is tough for this at the moment but it can be sourced
    b) factoring – whereby as soon as your client raises an invoice, they factor it and receive up to 80% finance against the invoice up front with the remaining 20% paid to the client once the customers pays.

    Costs vary dramatically dependent upon issues highlighted above – but there are solutions to your client’s needs. With straight factoring real estate security is NOT usually required.

    If you want further information on these types of facilities please go to our web-site and check out our learning centre
    where we have created a number of short (5-7 mins) introductory videos relating to how these facilities work.

    As for a quality broker – without blowing our own trumpet – this is what we do for a living (personally I have 23 years experience in raising working capital finance) and am happy to give references as you see fit……

    Hope this helps and good luck

    Regards

    Tim Lea
    Partner
    cashstream.com.au

    #1017859
    cleverfi
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    • Total posts: 9
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    Another option would be to use equipment finance.

    You establish your account and in effect are the supplier of the equipment.

    The client would obtain a quote from you and then apply to a lender for approval to purchase this equipment (they may have to supply company financials, directors guarantees etc, depends on the amount and company history).

    Once approval is received from the lender, you order the equipment and supply it to the client.

    When all equipment is delivered and invoiced with serial numbers supplied, the lender will pay you as the supplier within a few days. Generally this should be well within your 30 day account timeframe so you can pay your distributor.

    The lender will then get their repayments from the client so you have no further paperwork or chasing to do.

    Not sure on the IT supplier giving you a credit account, you would have to check with them. I will mention, doing it this way the deals need to be $10,000 or greater to make them worthwhile and the interest rates competitive.

    Hope this helps.

    #1017860
    siringo
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    • Total posts: 39
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    Thank you both for your replies.

    I think what you have mentioned cleverfi is the way I would like to go, it sounds easiest for me.

    How can I find an equipment financier? (sorry, but I did mention I have no idea what I’m doing). I would like to be able to provide my client with contact details so at least they don’t have to go looking.

    Thanks again.

    #1017861
    cleverfi
    Member
    • Total posts: 9
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    I am a Finance Broker, have done a few deals for IT equipmemnt. Happy to discuss with your client. They can contact me on 0410 017658 or via [email protected]

    Regards.

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