With Treasurer Scott Morrison pushing the benefits of Open Banking reforms to support a more competitive marketplace amidst the growing concerns of clients in being able to access finance, accountants have been urged to step up and “steer” their clients before they come head to head with roadblocks.
Speaking to Accountants Daily, Sova Financial director Natasha Janssens said accountants need to have their small business clients’ future financing needs at the back of their minds as they begin to navigate a tighter lending space.
“The lending environment is certainly changing and has changed in the last couple of years and certainly with the royal commission now, the lending criteria is getting tighter, so I'm seeing accountants walking a tightrope now in maximising tax deductions for their clients and showing suitable profitability to get finance approved,” said Ms Janssens.
Ms Janssens believes accountants need to work proactively in helping to get their clients affairs in order before they require financing.
“I think it needs to be a team effort between the accountant and the finance broker to make sure everything is being structured in a way that isn't breaking the law but walking that tightrope of trying to maximise tax deductions but making sure clients are not double hit at the other end,” said Ms Janssens.
“It's all about education and raising awareness because they will see their accountant before they see a finance broker or a bank and by that stage it is too late because tax returns have been lodged.
“The biggest complaint people have about accountants is that we're not proactive enough because we're usually the first ones who see what's going on and people expect us to steer them and guide them rather than just doing data-entry accounting.”
Ms Janssens comments echo those of the Institute of Public Accountants (IPA) general manager of technical policy Tony Greco who said that early planning was key to tackling the tougher lending landscape.
“The best tip is to plan when the cash is required so you're not doing it at the last minute, you’re doing it ahead of the crunch and that’s where accountants can play a role in providing cash flow forecasts. At the end of the day, if you know it’s coming, it gives you the ability to go out there and secure funding before crunch time,” said Mr Greco.
The tighter lending space has seen accountants and their small business clients increasingly looking to alternative lenders for sources of finance, which is seeing specialist mortgage brokers and lenders populate the market.
“If the banks won't lend, then absolutely there are other lenders who are prepared to step into that void,” said Mr Greco.