What is the cost of doing business

Posted by Paul Ryan • 11 August 2014 • Tags:

The well publicised Federal Government report into the Australian financial system released an interim report in July 2014. This is the first such inquiry in over 2 decades within Australia.

The inquiry led by former Commonwealth Bank CEO David Murray outlined the key issues effecting consumer and small to medium businesses in superannuation, credit card fees, retirement products, financial advice, business finance and home loans.

A review of the financial system is timely however ultimately it is the government’s decision making process that will determine whether it was all worthwhile process for every day consumers and business owners.

The key question centres around any government willingness to take the banks on. We have all heard the phrase “the banks are too big to fail” and on this basis the banks will only accept change if there is a clear benefit to them.

With all 4 of the major banks market capitalisation exceeding $80B they carry considerable clout. Whilst the cash rate remains steady at 2.5% don’t be fooled by the home loan war as the banks jostle for market share as they are still making reasonable margins on all our home loans.

We have heard a lot of discussion around superannuation and financial advice of late but very little in regards to credit card interest rates, fees and business finance.

A quick look on comparison site Mozo confirms interest rates on credit cards can vary from 12 -19% outside interest free period, business loans between 6-8% and business overdrafts rates between 9 and 13%. If you then look at asset and leasing finance, cashflow finance, agribusiness and commercial finance varying from 6.5 -18% you can see the cost of doing business from a finance perspective needs attention and competition.

If you are looking for other options in business finance you can contact your nearest intouch Finance Principal