Tips for Managing Wage Increases with Caveat Loans

By: Aaron Robbins0 comments

Searching for a short-term finance solution to meet wage increases means thinking outside the box; caveat loans can help!

Australia’s current labour shortage has impacted businesses nationwide.

With decreased labour supply comes increased strain on your company to attract the best team from an evaporating pool of candidates.

Higher wage demands from this diminishing candidate pool and the minimum wage increase of almost 5% have created an unavoidable obstacle for many Aussies companies.

So how do you combat increased wages while luring the best employees in this volatile market?

Accessing a short-term caveat loan is just one of the ways that you can successfully manage wage increases to prosper in the long run.

Keep reading to find out more.

Using business loans to cover wage increases

There is no denying that additional expenses to your business impact your cash flow.

While it may seem counter-intuitive to take out a business loan when your costs are rising, a short-term business loan, such as a caveat loan, can tide your cash flow over until your business finds its new operating rhythm.

Lending for business purposes doesn’t need to break your bottom line; we take a look at caveat loans in more detail below.

Caveat loans explained

Caveat loans are short-term business loans, offered anywhere from 1 month to 24 months, that effectively release equity in a real estate property to help fund a range of business purposes.

Short-term caveat loans are known for their flexibility and fast funding, which provides a competitive advantage when sourcing funds to retain key staff or attract new employees from a competitive labour market.

How are caveat loans secured?

Caveat loans are secured by registering the lender’s interest on the property title of the security property.

Whether it’s an investment property or residential property, provided there is equity within the property value, business owners can apply for a caveat loan using the available equity.

Due to the legal caveat sitting behind any existing registered mortgage, caveat loans can be used even if there’s a first mortgage or second mortgage on the property (which includes most home loan products).

Importantly, caveat loans aren’t able to be secured by overseas properties.

How quickly are caveat loans funded?

Fast caveat loans are aptly nicknamed; at Diverse Funding Solutions, we can approve and fund your caveat loan application in as little as 48 hours!

Having access to over 200 of Australia’s top private lenders gives DFS this advantage over other lenders, such as traditional banks or credit unions.

How do caveat loans differ from bank loans and other business loans?

At Diverse Funding Solutions, we offer our caveat loans through private lending.

Private lending offers many advantages over traditional financial solutions, especially for business owners.

Firstly, despite being an authorised credit representative of an Australian credit licence, we are not bound by the same arduous lending criteria that other lenders are.

This means that we require minimal documentation.

Secondly, private lending doesn’t rely on a credit check to determine the outcome of your application.

Instead, private lenders look to devise a suitable exit strategy. From there, we look at appropriate repayment schedules to determine how to repay the loan.

What are the caveat loan interest rates?

Unlike the exorbitant rates charged for other short-term finance solutions, our caveat loan products are some of the most attractive in the private lending market, starting at just 0.77% per month.

How much can I borrow through caveat lending?

At DFS, we can provide up to 75% of your property’s equity towards your loan amount.

Provided you have sufficient equity, you can have sufficient funds to manage wage increases!

Other ways to manage wage increases 

We take you through some of our other top tips for managing wage increases in your business:

Increase Prices 

Increasing prices is a part of every successful business strategy.

This step helps to alleviate the pitfalls of uncontrollable overheads, inflation and economic strain, recession and world events that impact everyone.

Your business needs to make room for success and accommodate the people who help you get there; your price point must reflect the quality of that investment.

Increasing your prices without alienating your customers can be a tricky compromise.

Being transparent with your customers, followers, fans, and clients is one way to show genuine care and professionalism.

When deciding to increase prices for products or services, it is essential to follow some simple rules:

Choose the right moment

Bombarding customers with increased prices across the board may not be the right option. Increase prices slowly, where necessary and explain each increase using reasoning and benefits that can be expected. Give your customers a ‘heads up rather than surprising them at the last minute. Use your email direct marketing, social and website content to break the news gently.

Contextualise the increase

Contextualise the reasoning behind your increases and create content that exemplifies the benefits. How will your business continue to provide the best service, create better products and experiences, and improve quality? Being transparent and offering information and advice ensures your customers feel acknowledged and considered.

Be contactable

Nobody likes receiving bad news; some people will inevitably be disappointed and disillusioned by price increases.

Make yourselves available to customers by giving them personal, one-to-one contact options.

Clarify how the increases will be implemented and their effect on the individual.

Provide alternatives

Some prices could be increased incrementally with options to retain a reduced cost for a base service or standard.

Perhaps apply your increase using a ‘premium’ service model that can be marketed to suit the budget of customers and clients who might otherwise be turned off completely.

Offering the option to choose from a level of service rather than a blanket increased service could help you spread the load and retain most of your customers.

If pricing models are not an option, try offering occasional discounts or rewards to loyal customers to leverage against the increase.

Bundle or add extras

You may be able to increase prices but bundle products or services to reduce pain points.

Add a little extra of something your customers love that doesn’t come at a considerable expense.

It might be as simple as offering free shipping on orders over a specific value or throwing in a pair of branded socks. Gifts and freebies go a long way.

Reduce expenses and invest in teams

  • Show your team members they matter by eliciting employee benefits.
  • Having the best staff who are working hard for you means making the most effective use of your budget and reducing the burden of hiring and re-hiring.
  • Offer monthly or quarterly monetary bonuses for top performers.
  • Invest in your employee’s mental health and wellbeing.
  • Career development is a brilliant way to utilise the knowledge of your existing staff and provide growth opportunities within the company.

    Give your team the tools to upskill, improve confidence and give individuals ownership over tasks and additional management responsibilities to show you trust and value their input.

  • Ask your teams what training they would like and set aside time to provide it.
  • Implement appropriate software that improves productivity and efficient customer service.

Bolster existing staff and reduce ineffective hiring methods

While wage increases may automatically have management thinking about layoffs and redundancies, the reality is that massive shifts in company structure and employee security could mean lower productivity.

Laying off staff to combat wages can come at the expense of destroying your entire company culture, so it’s essential to consider all the other areas in your business that can benefit from cost reduction.

Trim any surplus 

Think about your hiring funnel, where your most important resources are allocated, and look at streamlining your essential staff and services.

Are you paying for ineffective tools?

Are you wasting necessary productivity time pulling your teams into arbitrary meetings?

Trim the surplus, fix the leaks by examining sales funnels and productivity, and make the best use of your marketing, sales and tech teams.

If you’re paying for multi-channels that don’t provide a tangible return on investment — it’s time for an alternative strategy.

How can short-term caveat loans help manage wage increases?

Caveat loans are an alternative finance option that can provide a buffer to help you retain staff, incentivise teams and encourage peak performance.

Improve the conditions of the work environment and boost morale by considering one of these options.

Caveat loans are flexible options for a range of business expenses, offering fast approvals and competitive rates, which makes them ideal for leveraging what you have to reach your business goals.

Give employees the time, tools and knowledge to perform their roles effectively and reward their efforts.

Affordable finance for a short-term problem could be the solution that pays dividends in the long term.

Staying a foot of wage increases and changes in the labour market

While the current economic climate and increased cost of living, hiring and working may be daunting, rest assured that many Australian businesses and organisations are in the same boat.

Ensure you’re up to date with new regulations and the affected awards.

Keeping a finger on the labour market pulse and changes within your industry can make the difference in preventing your company from flat-lining in challenging times.

There are many ways to tackle wage increases and labour shortages; contact our friendly team to discuss if a caveat loan could be the key for your business to manage wage increases.

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