RegionsAustralian SMEs Return to Equipment Financing

Australian SMEs Return to Equipment Financing

Australian small and medium-sized enterprises (SMEs) are reversing last year’s declines and forecasting encouraging growth of 4.8% in their asset financing volumes over 2013, according to research from industry analysts East & Partners.

East’s annual
Asset & Equipment Finance Markets report
shows that while SME volumes fell by 1.3% last year they are rebounding as businesses take steps to improve their cash flows and remove assets from their balance sheets. SMEs were the only segment to post negative volume growth in 2012.

The 4.8% growth for the SME segment compares to whole-of-market forecast growth of 6.6%, with the corporate segment – comprising enterprises with annual turnover of A$20m to A$720m – the most bullish with a 8.7% forecast increase. The average forecast increase across all segments for 2013 is 6.6%, against growth of 1.3% last year.

SMEs are also reporting that as a proportion of their total borrowings, asset and equipment finance will move from 24.1% in 2012 to 25.5%. This is against a total market average of 22.8%.

Across the total market, cash flow continues to be the most important driver for equipment financing demand and is increasing in importance, cited by 68.8% of businesses compared with 62.2% last year.

Removing assets from the balance sheet is the second ranked driver, but the percentage of businesses identifying this as a driver fell from 27.9% last year to 23.5%. The age of existing equipment increased as a driver, moving from 18.8% to 22.9%.

“We continue to see signs that the SME segment is starting to stir, and move out of the defensive and de-leveraging mode it has been in following the global financial crisis and its aftermath,” said Lachlan Colquhoun, head of markets analysis at East & Partners.

“SMEs also overwhelmingly prefer their equipment finance provider to be their principal lender, so banks prepared to support SMEs with lending can look for some cross-sell opportunities with equipment finance.”

Related Articles

LATAM economic activity hindered by political uncertainty

Latin America LATAM economic activity hindered by political uncertainty

2w Laura Noble
India-US trade corridor: Accelerating growth with reverse factoring

Deals & Markets India-US trade corridor: Accelerating growth with reverse factoring

3m Vinod Parmar
China’s regulatory changes stimulate international interest

Asia Pacific China’s regulatory changes stimulate international interest

4m Michael McCaw
“Destroy or democratise” – how Open Banking will impact connectivity

Banking “Destroy or democratise” – how Open Banking will impact connectivity

4m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

4m Victoria Beckett
Money market reforms: Navigating LVNAV, CNAV and VNAV

EEA Money market reforms: Navigating LVNAV, CNAV and VNAV

5m Victoria Beckett
The Challenge of Building and Maintaining a Central Treasury Operation in a Decentralized Company

EEA The Challenge of Building and Maintaining a Central Treasury Operation in a Decentralized Company

5m BELLIN
The Treasury Challenge of a Post-Merger Integration

EEA The Treasury Challenge of a Post-Merger Integration

5m BELLIN