With almost four decades of working the Debtor Finance industry, I've witnessed its journey, faced its challenges, and recognized its immense potential. For anyone that knows me I am sure that they will agree that I am passionate about the industry and its potential to have a positive impact on the growth and success of Australian SMEs. Unfortunately, as I see things at the moment the industry faces a massive challenge around its relevance and capacity to support growing SMEs to meet the challenges of a rapidly changing economic, financial regulatory environment. Throughout my career, a single unwavering belief has also guided me - our industry needs a powerful, unified voice to champion the interests of its customers and its participants.

In 1994, the Institute for Factors and Discounters (IFD) emerged as a beacon of hope for our industry. Its vision was to illuminate the critical roles played by Factoring and Invoice Discounting in sustaining the cash flow of countless Australian and New Zealand companies. However, when the Global Financial Crisis (GFC) struck between 2007 and 2009, our industry was caught unprepared, fragmented, and unable to act collectively to protect its members and customers The dominance of the Big 4 banks, which regarded our industry as a minor player in their broader challenges, only compounded our struggles.

In the post-GFC era, IFD gradually fractured further witnessing a growing chasm between bank and non-bank members. This division significantly eroded our collective capacity and, more critically, our voice. During this period, IFD transformed into the Discounting and Invoice Finance Association (DIFA), carrying on IFD's important work, providing valuable statistical insights, and actively participating in the development of the PPSR legislation. However, DIFA's eventual absorption into the Australian Finance Industry Association (AFIA) occurred amidst disinterest and distrust among members. Consequently, our industry found itself without an independent voice to advocate for its members and customers within the Industry and Government.

We can no longer afford to repeat the mistakes of the past. We now operate in a rapidly changing economic landscape, marked by fierce competition and technological advancements. Our industry must position itself as a leader in alternative funding, shedding its complex fee structures and processes reminiscent of the 1980s which will come more critical  with the introduction of Unfair Contracts legislation in November 2023.  In short, we must become fit for purpose, embracing increased sophistication, collaboration, speed to market, and simplicity for our customers.

Here are some critical imperatives I believe can help guide our industry to ensure it is able to assist our key constituency which is Growing SMEs.

1.     Harnessing Infrastructure Opportunities: In this new economic landscape, Australia's growth centres around major infrastructure and defence projects. Our industry should explore the potential of invoice financing for subcontractors involved in these projects, who often face working capital constraints. Collaborating with industry and government is essential to provide streamlined solutions. Conversations with Government and industry are needed to address issues such as Assignment and the tightening of Security of Payment legislation to ensure Payment Authorisations are an "Unequivocal obligation to pay" on the due date in particular the application of similar legislation to the UK Business Contract Terms (assignment of Receivables) Regulations 2018 should be considered . This would provide considerable protection to SMEs involved in Contracts with Govt and major projects and substantially reduce the amount of red tape and risk as well as increase the access to funding.

2.     Reinstate an Independent Peak Body: Our industry requires a new independent peak body, akin to IFD/DIFA, to foster relationships with decision-makers, lobby governments at all levels, and represent mainstream and fintech debtor finance companies. Comprehensive industry turnover data is pivotal for effective advocacy.

3.     Establish an Industry Code of Practice: To overcome the "lender of last resort" label and eliminate detrimental industry practices, we must develop a code of practice that all members adhere to. This should be done in conjunction with Unfair Contracts legislation.

4.     Embrace Globalization: As Australia engages in global supply chains, cross-border and cross-currency receivables will surge. Collaborating with organizations like DFAT, EFA, and the Credit Insurance industry is essential to maximize our industry's potential. Engaging fully with international industry bodies such as FCI, IFA, and similar National Industry Associations in key jurisdictions ensures we stay updated with global best practices.

5.     Leverage Technology: Our industry must embrace technology to boost efficiency and reduce reliance on outdated risk management tools. This will benefit both our customers and the industry itself. The days of relying on manual methods to ascertain Proof of Debt are long past and are a constant issue with clients. Surely technology can be utilised to mitigate risk accurately with associated risk management driven by the availability of data as a first line defence. This issue is a constant concern from clients and one which can be easily simplified and understood by all parties. Unfortunately, it is a historical crutch in many cases which is seen as intrusive, time consuming and a negative for the industry as a whole.

6.     Education. There needs to be an Industry based education strategy to ensure that people entering the industry are given the opportunity to forge a career and learn the key skills required. This should encapsulate both front and back-office training and specific risk management modules. The need for education of advisors, accountants and brokers needs to be prioritised as there is far too much mis information and incorrect perception still being used which creates a negative stereotype of the industry.

These imperatives represent only a fraction of the challenges and opportunities facing our industry today and in the future. The time has come to chart a new course, transforming our industry into a dynamic force within the economy. To understand the stark contrast between how the Australian industry is perceived and its untapped potential, one need only compare the websites of AFIA (www.afia.asn.au  which does not even have a member of the Industry on its board but does have representation from Short Term Business loan Industry)  and UK Finance (www.ukfinance.org.uk ) and observe how the latter treats the invoice discounting industry.

Let us unite, reinvigorate our industry, and forge a brighter future for all stakeholders. Change is upon us, and the path to success lies in unity, innovation, and advocacy.

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