By Graham Patterson and Shaun Nicholson, One Finance
With New Zealand businesses considering how they can adopt best practices for carbon neutrality regardless of whether they have signed up to the scheme, technology and finance is definitely going to play a major factor in their decision making. 

Outside of the agriculture sections, many manufacturing-based businesses rightly view energy consumption as an area they can make the most impact.  Moving away from a reliance on fossil fuels and turning to electric vehicles, materials handling systems and sustainable energy offsets like commercial solar power and wind turbines are very much all in the mix.

It all sounds like a Green Party Utopia dream but the reality is somewhat different as business owners do the math to look at pay-back timelines, continuity to supply issues, servicing of their new technology and outright upfront cost.  Add into the mix our current dilemma of an economy dealing with COVID-19 and it can all seem a little too much for the average business owner.

As commercial asset finance brokers we have for a number of years helped fund electric forklifts, electric and hybrid company vehicles and have been involved in financing engineering companies involved in making wind turbines.  Only in recent times have we seen requests for time payment options on things like commercial solar power installations.  As technology becomes cheaper in these areas and suppliers can prove these energy alternatives as a viable source, we expect to fund more installations.

Spreading the cost of any asset purchase is always a question of future cashflow versus holding onto current capital reserves. Do you dip into reserves to avoid taking on debt or do you ‘keep your powder dry’ in order to self-fund both growth and quiet times by using an external funder for asset purchases? How does the exchange rate affect the purchase price and is this offset and/or enhanced by our current low rate environment?  So many questions simply for the usual asset purchases without the added complication of moving to alternative business practices with a view to achieving carbon neutral impacts.

Moving forward we expect to see the finance sector embrace new technologies as the norm and offer funding terms as they would on more traditional assets.  To help make this all work funders will need to be accommodating in such things as seasonal payments which are a common repayment structure in the agricultural sector and can also be applied to commercial solar power generation so that repayments are lower during low output months.

We have a long way to go until 2050 when the goal as a nation is to be carbon neutral however as technology changes so will finance need to in order to make it all work.

Graham Patterson: After an extensive career in Banking having worked at ASB and JP Morgan (UK) Graham moved to asset finance with Ford Motor Credit.  In 2002 he joined Shaun Nicholson in forming One Finance and oversees not only repeat client business but back office operations.

Shaun Nicholson: Started working life at American Express Cards and Westpac owned, AGC Finance then worked at Ford Motor Credit.  Time at Countrywide Bank owned Capital Equipment Finance was followed by a move to Capital Bank plc in the UK and then back to NZ where he started One Finance.  Shaun is at the front end of the business working with machinery dealers to fund their clients.


The information and opinions within this column are not necessarily the views or opinions of Hot Source, NZ Food Technology or the parent company, Hayley Media.