Reece turns on the funding tap with interest-free Latitude cash

Plumbing supplier Reece has signed up to Latitude Financial’s ‘buy now, pay later’ offer to help fund home improvements.

Reece Plumbling Group CEO Peter Wilson. Picture: Aaron Francis

Plumbing and bathroom supplier Reece has signed up to Latitude Financial’s interest-free “buy now, pay later” offer to help customers fund a COVID-fuelled home-improvement bonanza.

The DIY sector has surged in recent months as thousands of people forced to work from home have set up their office spaces and completed home renovations.

Reece has been a beneficiary of the increased spending in the home, which is set to be bolstered further as the federal government starts paying its $25,000 home-builder grants.

Latitude CEO Ahmed Fahour confirmed the company had signed up Reece to its interest-free platform, which is used by retailers from Harvey Norman and Forty Winks to tech giants Apple and Samsung.

Mr Fahour said he had an extra $2bn to fund Latitude’s lending book, after raising $1.4bn from investors via a securitisation offer, which also included $237m from the federal government’s financing arm, the Australian Office of Financial Management.

He said the company was ­focusing on the home improvement space to capitalise on people pouring cash into their homes during the lockdown. In the week commencing on June 21, home improvement spending soared 26 per cent, while furniture and office spending rocketed 92 per cent compared with normal weekly conditions, according to Illion and AlphaBeta data.

The frenzy comes as the Australian Taxation Office has increased the instant asset write-off for small businesses to $150,000, while people forced to work from home during the pandemic have bought computers, screens and other home office equipment.

“We can see certain parts of the business that are taking off,” Mr Fahour said, adding that spending around the home had risen dramatically during the pandemic.

“It’s interesting … another one of the merchants that we have signed up to provide a financing solution is Reece.

“Reece is an example of a business doing incredibly well with the growth of the home economy. Everything is geared towards the home economy for our business.”

Reece, 67.7 per cent owned by the Wilson family, raised $600m in April to bolster its balance sheet so it could capitalise on greater investment on plumbing and sanitation arising from the pandemic.

“Reece was always set up to be depression-proof,” its managing director, Peter Wilson, said last month. “My grandfather, whose values are entwined in the Reece way, lived through the Great ­Depression and his guiding principle was to have a strong balance sheet, own most of the stores, and have no debt so that you can ride through whatever the economy threw up.”

Since launching LatitudePay last September, which is the company’s small-ticket “buy now, pay later” product, Mr Fahour said he had gone from signing up 5000 new customers a month to 50,000 a month.

“We told the market we would get 70,000 customers — that’s what we thought we would get out of it. We are now sitting at 300,000 customers, just in that small-ticket category, and overall we are over two million customers in interest-free.”

But Mr Fahour stressed Latitude wasn’t lending to just anyone. He said the company was diligent on its credit checks, with its average customer relationship lasting seven to 10 years.

“Our June delinquencies are below June last year. It just shows you the kind of customers we work with. These customers are high quality — 80 per cent-plus have full-time jobs.

“When you have a customer base like that — and nobody wants to be delinquent — but it’s really quite humbling for me to have such a terrific set of customers to work with, and merchant customers.”