In a time where pretty much anything is at our fingertips, having to wait for anything is a rarity and can become a frustration or a hinderance. Finance is no exception, and in a world of automation, long decision timescales can cause significant negative impacts on business planning, implementation and even lead to lost sales.
The timescales on a decision for a finance application can vary hugely depending on the type of finance and who you are working with – whether directly or through a broker. Typically mortgages and invoice finance can take weeks to sort, where as asset finance is a much quicker process. In most cases applications can be sorted in hours or days, particularly when working with a broker.
A good broker will keep you updated throughout the process and when having initial conversations with you, will give a good indication of the timescale for an approval and then from there how long it is likely to take to release funds to the supplier/delivery to be arranged. This will enable you to plan and manage any internal or client expectations and help to manage your timeline. For particularly urgent requirements, as broker’s skill is knowing who at that particular time will provide a decision quickest, whilst still offering a competitive overall solution.
Many of the delays seen in broker led asset finance applications, is due to a lack of understanding or poor presentation of the deal, which results in multiple funders being approached. Each funder can take up to 48 hours to reach a decision, so you can see how delays can add up. At Focus, we pride ourselves on getting it right on day one, which not only means that the whole market hasn’t seen your details, but also results in a much quicker decision.
A very good example of this, is a client I recently worked with, who had approached someone before us who took over a month to obtain a decision! Not only is this a ridiculous amount of time for a decision, but the solution provided was also expensive. We managed to provide a solution for the client in less than 48 hours and saved them £4,245.00 over a 5 year period.
Of course there are other factors to consider when working out an acceptable timescale for an asset finance application, and there is no one size fits all rule. Things that can affect a quick decision timescale include your credit, the type of asset, the number of assets and suppliers, if the deal is straightforward asset finance or refinance, as refinance requires valuations which takes more time. We would always suggest asking your broker early on, how long they anticipate the application taking as this will give you a good idea of what timescale you are working to.
The consequences of slow decisions will be felt by everyone:
- Clients may no longer require the equipment
- Suppliers may lose out on the sale
When not working with a broker, unless you receive an auto decision, timescales are often longer and updates can be hard to come by. This makes it hard to forward plan and can leave you somewhat in the dark.
It is also worth bearing in mind, that whilst auto decisioning is great from a timescale perspective, they can be rather limiting and often a manual underwrite where there is an understanding of your business will result in a more competitive or appropriate solution.
As always, it is a balance, to ensure that you are receiving a decision in a timely manner allowing you to hit your deadlines, but that you aren’t foregoing a more competitive solution for the sake of waiting a day or so. At Focus we will always work with you to understand your priorities and if this is to receive a decision within hours, we may have an option for this, although this is likely to be at a slightly higher rate than a funder who will provide a decision in 24 to 48 hours. By laying out all the facts, you will be able to make an informed decision, ensuring that you receive the most appropriate solution for your needs.