Qualification endorsed by CAFBA
Whether you are a residential mortgage broker or a recent graduate looking to enter the commercial finance industry, your starting point for qualification in asset and commercial finance is the Commercial and Asset Finance FNS41820 Certificate IV in Financial Services (Complex Issues in Commercial Lending).
The Certificate IV in Financial Services is aimed at developing important competencies that you will find valuable in your role as a commercial and equipment finance specialist, including product knowledge and practical applications, legal and taxation aspects, credit assessment and documentation required to implement a commercial or asset-based loan.
Developed by the Institute of Strategic Management (ISM), which has a long history of delivering specialised content to the financial services sector, including both banking and finance broking, the Certificate IV is endorsed by the national peak professional body of the commercial and equipment finance industry, the Commercial and Asset Finance Brokers of Australia (CAFBA).
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Commercial and Asset Finance Certificate IV in Financial Services – course structure
The coursework is divided into four modules which methodically take you through the skills necessary in your role as a commercial and asset finance professional.
Module One: Background and issues for equipment and commercial finance
The module examines the history of the markets as well as the development of associated financial products. It explores the various debt instruments, tax treatment and impact on the borrower. Industry regulators and compliance requirements are discussed.
Module Two: Presenting products and marketing in equipment and commercial finance
The typical term, cost, flexibility and application of the various finance products are covered as follows:
1. Finance products to suit asset based financing (motor vehicles, production equipment, machinery and office equipment/fixtures)
2. Finance products to suit cash flow and working capital needs (inventory, accounts receivable, overdraft needs)
3. Finance products to suit capital acquisition (land, buildings, refurbishment, large capital projects, property development)
4. Finance products to suit business expansion, mergers and acquisition, start-up funding (new product development, manufacturing, exploration, buy-out by management or investors).
At the end of this module participants should be able to:
- Explain the range of categories of the equipment and commercial finance market
- Discuss in detail the application of each form of finance in these categories
- Outline the key criteria clients should consider when choosing one or some of these finance products.
Module Three: Credit Application Process
Mastering this module is key as it gives you the knowledge to move beyond matrix lending, where only a cursory understanding of the borrower’s business is necessary. This module gives you the pathway to obtain a deep understanding of the borrower’s business, its structure, its risks and its potential return on investment.
Business structure, industry risks, business analysis, financial statement analysis and credit capacity are all covered.
Identifying risks to a business and examining them in a credit paper allows you to present ways to mitigate those risks logically and methodically. Understanding that the credit underwriter rarely has the benefit of meeting face to face with the borrower, it is essential that the credit submission is set in such a way that all relevant information is readily available by way of summary and supported with documentation.
A section of this module is dedicated to a full sample credit paper, also known as a credit memorandum.
At the end of this module participants should be able to:
- Explain the steps the underwriter will go through to assess moderately complex credit applications
- List the information required by the underwriter to assess each aspect of the client’s business
- Outline the structure of information that will be provided in the credit application report.
Module 4: Understanding and analysing financial reports
“Financial reports are the primary window into a company’s financial performance,” says CPA Australia.
Not only do financial reports provide a ‘point in time’ view, but by comparing year to year financial movements along with financial ratios, they also allow for future predictions of a company’s profitability, cash flow and capacity to meet current and future commitments.
At the end of this module participants should be able to:
- Discuss the key aspects of financial reports
- Outline how profitability, liquidity and solvency is identified in financial reports
- Explain key financial report categories and potential concerns an underwriter may have about these
- Discuss in detail the structure of the P&L and the Balance Sheet
- Highlight and explain how non-cash, discretionary and transfer costs need to be analysed to determine if these can add to serviceability.
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The Commercial and Asset Finance Certificate IV provides an excellent understanding of key issues and product information in the commercial and asset finance industry. This course has now been available for two years and has had very positive feedback from participants from both the banking and commercial broking sectors.
With the newly announced federal government training subsidy the only cost may be your time!
So get started today. Go to: FNS41820 Certificate IV in Financial Services
This article was supplied by CAFBA
