Point-of-sale and finance company FlexiGroup has signalled a big push into the small business market, saying it will look to acquire SMEs in the commercial and consumer credit industry alongside a move to provide more credit to businesses.
The move comes as the company announced a 16% increase in net profit of the first half of the year to $32.6 million. FlexiGroup has performed increasingly well over the past few years due in part to growth among small businesses which prefer to rent equipment rather than buy outright.
However, research from credit reporting agency Dun & Bradstreet has found only 5% of small businesses were likely to seek finance/credit to help their business grow in the June quarter of 2013. That figure is down from 9% from the March quarter.
Patrick Coghlan, brand and strategy manager for Creditor Watch, says access to credit is still fairly restricted among SMEs, which is being reflected in monthly insolvency statistics.
“Despite the rhetoric from governments and banks saying it’s positive, I think people at the small business level are still struggling.”
Struggling SMEs are now opting for credit sources such as FlexiGroup instead of traditional banks.
“Trade credit suppliers are taking on more risk at the moment, because they have to keep looking for more sales. They have to be a little more generous to customers and prospective customers,” says Coughlan.
“That can be through extending payment terms from 30 to 45 or even 60 days, or relaxing their credit policies.”
As a result, the SME elements of FlexiGroup have still performed well. The company’s Flexi Commercial group, which offers business equipment leasing, saw net profit rise 118% to $3.7 million.
In a statement, chief executive Tarek Robbiati said the business will focus on expanding into new areas – including the acquisition of consumer and commercial finance businesses.
Robbiati has said the business must grow this Flexi Commercial division, as it provides more significant sales to help support the rest of the company. Its success has helped plug lower revenue in other divisions, such as the Flexirent consumer finance business, with its profit down 9%.
Coghlan says businesses such as FlexiGroup will continue to take on more risk as it searches for new customers.
Much of FlexiGroup’s growth has come from acquisitions, including finance groups Certegy and Lombard.
In late 2011 FlexiGroup purchased Paymate, an online payments services, as part of its push into the online sector. The company powered one of only three payment services available on eBay.
Now, Robbiati says the online sector will continue to be a major focus for the business.