Working smarter this EOFY

30 May 2024

There are few times in a year that can create as much stress for businesses as the end of financial year. 

It’s a mad rush to tidy up finances, get paid (and pay) invoices, and prepare, compile and present reports and budgets. Businesses must then be ready the very next day for the new fiscal year. 

It’s a busy time in premium funding too. This year we’re already noticing issues that a business can face when it finds itself unprepared come the end of June.

Mat Donaldson has managed our market-leading Risk Assessment team for eight years, delivering a 99.97% approval rate for our brokers in 2023. Mat has a unique and compelling view on the benefits of understanding the potential problems. In this article, we look at how to deliver more value to your clients by supporting them this end of financial year.

As businesses face more pressure, there’s a greater risk of clients falling behind on their bookkeeping or struggling to provide financial information on time. This issue tends to intensify in June, as other financial deadlines and tasks need to be dealt with.

Brokers can gain an advantage by engaging early with their Account Manager. This proactive approach also connects them with Hunter’s Risk Assessment team, giving the best chance of a good outcome for everyone involved.

Early action is vital during EOFY for any insurance programs. Programs exceeding $500,000 in particular, as they require additional assessment steps before approval.

Understanding loan structure and risk assessment triggers can make a big difference. Most assessments for premium funding depend on the amount of loan exposure and net loan balance. Split or delayed premium settlements can greatly reduce loan exposure, and in turn the level of financial assessment needed.

It’s important to raise if clients haven’t prepared reports or can’t provide financial information with your Account Manager early. Together, you can explore different structure options to help lessen pressure on everyone to get the invoices paid.

In states where workers’ compensation isn’t invoiced by brokers, customers may not know they can also use a premium funding arrangement to pay their bills. 

Insurance brokers can help their customers by talking about strategies for managing workers' compensation duties this year. They can also propose a quote through their premium funding partner. 

Clients can benefit from workers' compensation invoice options, such as quarterly settlements or Early Bird discounts. Premium funding often offers more flexible repayment terms than those set by underwriters. This can potentially improve a customer's cash flow.

Asking for a business name may seem simple. But it’s striking how often they’re incorrectly listed on a premium funding application. This can cause long delays in approval times and even a need for new documentation.

Your premium funder needs the legal names held on government registers – not trading or business names. Make sure the legal name on the premium funding application matches the ABR or ASIC website. This will mean the correct ABN or ACN is used on the contract, for an easy and quick approval.

It’s important to ask about the rules for Trusts, Trustees and Superannuation funds to make sure the documentation is structured correctly before it’s submitted.

Understanding your premium funder’s risk and assessment guidelines can make it easier to get more loans approved quicker. Assessment triggers are usually dynamic. They use the calculation of net lend and exposures to drive documentation rules. 

Become familiar with the following key triggers for Hunter:

  • Loans up to $100,000 can be automatically approved, which allows almost instantaneous approval. Loans above $100,000 need to be assessed manually by the Risk Assessment team. This can take up to 48 hours to complete.
  • Loans that include over $150,000 of non-cancellable policies quite often trigger the need for financial statements. Be prepared for this and source these from your client while the insurance and funding contract are being arranged. Common non-cancellable lines across the Hunter loan portfolio are Workers’ Compensation, Professional Indemnity, Contract Works, and Director’s and Officer’s policies.
  • Loans above $500,000 may need more approvals. This can extend the review and approval process and time. For large value premiums, Mat recommends reaching out to your Account Manager. Getting in touch early to make sure you have all the information Hunter needs allows for a smooth review.

It’s important for a premium funder to have an experienced risk team who are truly solutions driven. 

Premium funding is a valuable tool to help businesses of all sizes manage their working capital. Accurate and efficient risk assessment helps the customer get a loan facility tailored to their specific needs.

As we’ve seen in recent years, natural disasters and unexpected business interruptions are more frequent. Post loan approval, things can and do happen that will impact customers’ finances. It’s critical that your premium funder genuinely works with these clients to meet their loan repayments. When looking at future lending, your premium funder should also consider any hardship impacts.

For more information, reach out to your Account Manager. They can provide detailed information on Hunter’s policies and Risk Assessment guidelines.

The information contained within this article is of a general nature. While all reasonable care has been taken, Hunter Premium Funding accepts no responsibility for any loss, expense, or liability which you may incur from using or relying on this information. Please seek your own professional advice on anything contained in this article.
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