This article is sponsored content brought to you by BOQ Specialist.
Thanks to COVID lockdowns, equipment shortages and long delivery times are still causing headaches. Fortunately, BOQ Specialist can help relieve some of the financial pressure involved.
The pandemic after-effects are still being felt in the equipment supply world, despite emerging from lockdowns and resuming ‘business-as-usual’. Interruptions to international supply chains, ongoing lockdowns in major manufacturing centres, staff and materials shortages have impacted many industries, creating supply bottlenecks. While these problems will eventually resolve, the memory of uncertainty from the pandemic has lingered, slowing the entire process of equipment purchases.
BOQ Specialist’s Melinda Goddard says, “A lot of veterinary equipment has experienced delays, because the majority of these items come from China and overseas. COVID has had a massive impact on that.”
Melinda also points out that most clients must pay a deposit up front which may be as high as 20 per cent.
“In the past, when purchasing equipment, we may have said, ‘if your cashflow allows, pay your deposit and we’ll reimburse on delivery.’ Most clients were fine with that. Post-COVID, nobody has the cash reserves they thought they might have, from keeping money in the bank in case they needed to lock down again. Even if we’re past lockdowns, people still want to keep emergency cash reserves. It’s important to preserve cashflow without having the burden of paying for equipment not yet in your practice to generate income from.”
Take the pressure off
In the past, such a transaction was called an escrow facility. Now it’s more commonly referred to as a drawdown facility, Melinda says, and is a short-term line of credit which is ideal for transactions like capital equipment.
That’s why BOQ Specialist offers a drawdown facility which transfers the hassle of managing payments from the practitioner to the bank. “It essentially involves signing two sets of documents,” Melinda explains.
“There’s a drawdown set of documents, which is a temporary agreement, whereby we pay for invoices as they come in. Then, once we’ve paid for all goods or all goods are received, and all tax invoices are in place, that’s when we convert the drawdown agreement into a chattel mortgage or lease. This means that clients don’t have to make repayments on their purchases until the goods are received and in use, providing a little breathing space with current supply chain issues.”
As delivery times remain stretched or uncertain, this financial product makes a lot of sense for veterinary professionals wanting to keep an eye on their cashflow. While many finance providers will offer such a facility, Melinda points out that the difference with BOQ Specialist is that they require minimal or no security to start a drawdown facility. This gives the practitioner peace of mind that they don’t need to start repayments on the equipment until it’s installed in their practice and earning income for them.
In the meantime, she says, veterinary professionals appear to have adapted to the ‘new-normal’ of delays, waiting for equipment to arrive. “It’s like getting a new car now,” she says. “In the past it took six months to arrive, now it may take up to 12 months. I think clients have adapted to the idea if they want to purchase new equipment, they need to plan ahead.”
The issuer and credit provider of these products and services is BOQ Specialist – a division of Bank of Queensland Limited ABN 32 009 656 740 AFSL and Australian credit licence no. 244616 (“BOQ Specialist”). Terms, conditions, fees, charges, eligibility and lending criteria apply. Any information is of a general nature only. We have not taken into account your objectives, financial situation, or needs when preparing it. Before acting on this information, you should consider if it is appropriate for your situation. BOQ Specialist is not offering financial, tax or legal advice. You should obtain independent financial, tax and legal advice as appropriate.