Things have changed in business recently and continue to do so at a rapid rate. Our business environment is not just South Africa or even Africa anymore; it’s the world. Through globalisation, our markets are easily accessible and vice versa.
Countries like China and India and many more emerging economies are selling products in South Africa at extremely competitive prices, making it extremely difficult for South African businesses to compete. Trade protection duties are no longer in place or have been reduced substantially and offer no assistance to local industry.
Globalisation, free markets and the credit collapse back in 2008, which was unprecedented in our modern age, have created a scenario unlike anything we have seen since the great depression back in the 1930s.
Major financial institutions and markets were on the brink of collapsing and the banking system was under serious pressure with some banks going out of business overnight. Governments had to step in to prevent a total meltdown of the financial system. This brought about changes and regulations in the banking industry which directly affected the way banks lent money to business across the world. South Africa became one of many countries to experience these changes with new regulations and the ripple effects of these changes have impacted on local business quite dramatically.
These changes have made it more difficult for small to medium size businesses to gain access to capital to fund their businesses. We have all experienced how difficult it is to get a loan from our banks these days and we are often reminded of ‘the good old days’ when we could call up our bank manager and arrange for a finance facility for our equipment needs over the telephone. Those days are pretty much gone but our need for finance has not and, if anything, it’s the exact opposite.
In order for business to have an edge in the global market, we need to invest in technology and equipment. We need to create extra capacity, be more productive, cost effective and competitive to survive. In short, we need to be smart!
Banks have also rationalised their work forces and the expertise that previously existed within the banks has diminished.
Fortunately, niche operator finance companies such as First Asset Finance have entered into these markets and now provide the necessary skills and ability to lend to small and medium size business in South Africa.
Innovative financial product development has enabled these specialist finance companies to offer a total finance solution to business. Not only do these finance companies provide the capital to purchase equipment at a competitive price but they also provide that old-fashioned personal attention and an understanding of the business and its owner’s needs that we all crave.
These finance companies offer innovative, uncomplicated structures that enable businesses to borrow with the ‘rental liability’ not appearing on the balance sheet. The ‘loan’ is therefore hidden and does not impair or impact the business’s financial status. This is advantageous especially when the business needs additional cash for example, for an overdraft or debtor finance from its bankers. In addition, these new structures provide very effective tax benefits as the rental expense is fully deductible from taxable income.
Some niche finance companies such as First Asset Finance have a genuine understanding of the industries in which they operate, customers’ needs and the latest trends in business, and don’t just pay lip service to it. Core to having this capability is that they align themselves with quality suppliers of equipment and work together with them so that they remain close to the source of innovation and updated technology. These finance companies enable all parties to enjoy a win-win situation, enabling the customer to acquire the latest innovative equipment and the supplier to sell with confidence.
Specialist finance company representatives on the ground enable business owners and equipment suppliers to gain a clear understanding of a certain business’s needs quickly, ensuring fast transaction turnaround times and the ability to provide concise and meaningful feedback to both customers and suppliers. In general, specialist finance companies are dedicated to building long term relationships with their customers and suppliers so that business transactions and understanding become effortless. We at First Asset Finance certainly believe this is fundamental to building a successful customer relationship.
First Asset Finance is a market leader in South Africa and makes the credit application process simple for both customers and suppliers. Our skilled sales representatives service both customers and suppliers country wide and offer a personal touch to the otherwise faceless finance industry of today.