Rebecca del Rio discusses broking, Bizcap and why impending super changes are bigger than you might think
Rebecca del Rio (pictured), chief revenue officer at specialist SME lender Bizcap, knows full well the advantages of working with Australia’s 22,000-strong broking community.
“Brokers are the best,” says del Rio in a chat with MPA about the goings on at Bizcap. “They’re the key to every lender in the non-bank lending ecosystem in Australia. Brokers have a really in-depth understanding of the product market, the product breadth and depth and what lenders are actually offering.”
This, notes del Rio, gives clarity to lenders like Bizcap, allowing them to finance higher volumes of SME deals.
Bizcap currently has a 60/40 mix of brokered and direct-to-customer deal flows.
“We've had huge increases year-on-year as a business, so our broker book is definitely increasing,” del Rio notes. “Brokers are incredibly important. The lending landscape has become far more complex, with a broader range of products and providers.
“Business owners are increasingly turning to brokers to help them navigate those options. They obviously play a very critical role in translating business circumstances into funding solutions.”
Del Rio explains how broker-originated deals often come with clearer context around the business, the purpose of funds and the expected outcomes.
“We would love more broker deals,” she says. “If broker deals were making up 80-90% of our business, we would be rapt.”
Broker-originated deals also tend to be larger at Bizcap, thanks to the confidence customers place in brokers to guide them through significant financial commitments, rather than taking a go-it-alone approach.
As del Rio puts it: “You want to be guided by the expert, and the broker is the expert.”
SMEs facing cash flow pressures
Looking at the market, customers are increasingly relying on brokers to navigate growing cash flow pressures.
“It's pretty clear that the appetite for needing cash flow is often a timing problem, not necessarily a profitability problem,” explains del Rio. “SMEs are still very viable. They're trading well, but their outflows are accelerating faster than their inflows.”
On average, Bizcap customers are using around 66% of their approved limit in the first three months, while utilisation typically exceeds 150% as limits are increased for well-performing borrowers.
Inflation has inevitably pushed up running costs, while elevated interest rates have increased repayments SME customers’ monthly outgoings, meaning they are often taking longer to pay.
“It’s this mismatch that creates a pressure and the need for stable cash flow and in turn, cash flow solutions,” says del Rio.
Read more: Helping SMEs through holiday season crunch
Recent research conducted by Bizcap shows that, over the past few years, between 40-45% of SMEs have cited cash flow constraints as their biggest problem.
While these pressures are often seasonal, it varies greatly from sector to sector. Companies in construction, logistics and trade, for instance, often close shop over the Christmas period, even though they still have super, payroll and other outgoings that need to be financed.
An impending super storm
Cash flow management could get even harder for SME from this July, when new payday super rules come into force.
From 1 July, employers will have to pay super at the same time as salary and wages, instead of quarterly. Superannuation guarantee must be calculated every pay cycle (weekly, fortnightly, monthly), not on a quarterly basis.
Contributions generally must reach each employee’s super fund within seven business days of payday, meaning employees will receive super funds shortly after each payday rather than in big quarterly chunks.
It might not be a monumental change, but del Rio reckons it could catch SMEs off guard if they don’t prepare themselves accordingly.
“It's one of those changes that sounds really administrative on the surface, but the reality is it's going to be a major cash flow shift for Australian SMEs,” she says. “I think SMES should be really planning now.”
del Rio calls the super changes “a huge behavioural and operational change”, adding: “Suddenly there's going to be this immediate cash obligation attached to (pay runs), rather than super being traditionally something that's managed in arrears.”
del Rio suggests businesses should be modelling what the changes could mean for them and their cash flow rhythm.
Some lenders – including Bizcap – can give an approval without running a credit check, meaning businesses have peace of mind knowing there is a facility there if needed.
