Tag Archives: Banks

The Bank Manager and I

Bank managers…  a business’ friend or a business’ nemesis?

Often banks, and, more particularly, their managers, are viewed with caution, or even fear. Bank managers are viewed by many business people with suspicion and a potential reason for business failure. But do they truly deserve the reputation?

One man I met as a potential client spoke with venom as he blamed his bank for the failure of his business. Despite my attempts at investigating the true reason for the struggling enterprise he would tell me no more than that the manager would not extend his overdraft so he could not buy food for his poultry.

A sad tale?  Or was it?

The attitude of this man was one of defensive attack when questioned about his problems. He was unable to recognise that he had a hand in his business’ demise, instead blaming the easiest person – his bank manager.

When the opportunity arose his wife informed me that the “businessman” would drive 70 miles to London to deliver a tray of strawberries or eggs to a customer if they ran out between their normal daily deliveries. Good for customer relations? Yes, but not when you do it three days a week! The result was that his profit was wiped out, but he didn’t realise it, and worse still he refused to accept it when his business’ problems were pointed out to him.

Why do people blame banks for their problems?

Often the first person to make a business realise that they have cash flow problems is the bank manager. Usually the manager will contact the businessman and explain the financial situation to him. Sometimes the businessman accepts the advice offered, sometimes they don’t.

Banks usually identify these problems before it is too late for the business to save the situation. It is at this stage that the business needs to act, with the help and advice of their bank.

Remember bank managers are human… Yes, human. They can and will help the business to identify the cash flow problem and potential routes forward. They will also help to identify the most appropriate sources of advice to help the business identify the most suitable course of action.

Businesses don’t fail because of their bank… but they may fail in-spite of their bank.

The moral is to talk to your bank and to work with them. Use the manager as a source of information and advice. Work with them and reap the benefit. Usually a business which works with it’s bank can and will survive. However, in situations where the business cannot be saved working with the bank instead of against it will help the businessman to preserve the maximum amount of assets that are left for the owner after the business is closed and all debts are paid off.

And what of the strawberry and egg man? I did not take him on as a client and he lost more money through his failure to accept facts. Fortunately for him and his family the banks refusal to extend his borrowing facility meant that he was left with some assets  –  had his bank continued to lend he would of lost everything.

Banks do not like to see businesses go under. Banks are only successful if those who bank with them are successful therefore they try to help businesses. Banks also have a duty of care


The Money-Go-Round

“My bank is bouncing cheques on me just when I’m making more profit than ever before. Why do banks do that?”

Does that ring bells with you? Too many of the businesses I work with say just that to me when I first see them.

The business does on the face of things look good. It is profitable and plenty of work is coming in. Nothing could possibly be wrong… could it? It’s just the bank being awkward… isn’t it?

Well, obviously something is wrong, but what?

Firstly lets get one possible cause out of the equation straight away. It is highly unlikely to be the bank. Why? Because, whether you like it or not, banks are NOT in the business of being awkward to their customers. Quite simply that would not be good business for them. They need their customers to succeed otherwise they (the bank) cannot and will not make money. Cheques will be bouncing because of an under lying problem in the business not the bank.

If it isn’t the banks fault what is the cause of this problem?

Ask yourself the following questions…

  • Do you always open your bank statements and check the payments and receipts that you think you made against the ones shown on the statement?
  • Do you offer credit terms? What are they? Who do you extend them to?
  • When do you send out your invoices?
  • How do you chase up late payers?
  • What are your credit terms?

All of the answers you make to these questions can have potentially damaging implication on the cause of a business’ problem at the bank. The all affect a business’ cash flow.

You need to be proactive in your approach to rectifying and issues that arise from your answers to these questions.

If you don’t open your bank statements, how can you identify a problem at that is on the horizon before it hits you like the intercity on its way to London? If you don’t have time to open them now, you will soon have plenty of time on your hands when your business closes!

If the figures in the statement don’t agree with what you think they should, why don’t they? Investigate!

If you offer your customers credit terms, ask yourself does YOUR business benefit from them or is it just your customer who benefits?

Do you send out your invoices regularly and check up to see that they are paid on time? Too busy? You soon won’t be!

Do you receive credit terms from your suppliers? Are the terms better or worse than the terms you offer your customers. If you are regularly paying out for goods and services before you are paid you are most surely heading for trouble?

You can have a profitable business, but have poor cash flow. The world has seen many profitable businesses come and go when, with care they would have thrived.