Cashflow Finance reports 226% growth in equipment finance

Cashflow Finance, part of the CML Group, announced that it saw strong growth in its equipment finance division in FY19, which is distributed solely through the broker channel.

Having first launched in July 2017, the equipment finance division offers loans of between $20,000 and $500,000 – with a primary focus on secondhand transport and yellow goods.

Over its second year of business, the equipment finance division generated $27 million of receivables on $20 million of funds advanced, generating $3.4 million of revenue in the financial year 2019 – a 226 per cent increase on the prior year.

This equated to $1.6 million in earnings before interest, tax, depreciation and amortisation (EBITDA) for the group, a 538 per cent increase on the year before.

Speaking to Mortgage Business about the growth of the segment, CML Group CEO Daniel Riley commented: “In equipment finance, all of our business comes through broker.

“We employ experienced credit analysts to work directly with the brokers, which they like because they can get an immediate response and feedback for the clients.”

Mr Riley welcomed the uptake of the offering, noting that it was “starting from a lower base”, being only the first full financial year that it has been in market.

However, he added that brokers had welcomed the product offering and that CML Group would be looking to expand its broker relations in this market in the future.

He said: “We have built a team of very experienced people from within the industry, and they have broker relationships that they have brought into our group, so that is really how we’ve been able to grow volumes so quickly and gain some traction in what is our new industry for us.

“But we’re bringing some new people into our business now who will be relationship managers with that broker channel so we can get to expand the number of accredited brokers that we have in that division.

“Our group strategy for both equipment finance and invoice finance is to work with more aggregators moving forward. So, we have recently formed a relationship with Connective, and we are receiving opportunities for both parts of the business through the aggregator channel, which we would like to expand further,” he said.

As well as seeing growth in the equipment finance offering, the CML results also show that its core invoice finance offering grew by 19 per cent, with nearly $1.6 billion of invoices purchased. 

This stream resulted in $19.4 million of EBITDA to the group (7 per cent on the prior comparative period). 

While the broker channel generates the majority of invoice finance flows (approximately 70 per cent), Mr Riley noted that there has been a growing share of business coming direct.

The CEO attributed this to a lack of experienced BDMs in the industry, which was acting as a “limitation to CML Group expanding that channel”, coupled with “better at engagement through the digital channel with SMEs directly”.

Overall, CML Group announced net profit after tax and amortisation of $9.5 million, up 46 per cent, and EBITDA of $20.4 million, up 16 per cent on the prior corresponding period.

[Related: CML Group expands funding facility to $120m]