A long awaited privacy review has finally been released this week by the ALRC, and in it a watered down version of positive credit reporting has been endorsed. As one of only 2 countries in the OECD who currently only provide negative credit reporting, ie when you haven’t paid your bills, not when you have, Australian credit risk managers have always done an impressive job given their lack of borrower insight. The US have had comprehensive reporting for a long time and look at the pickle their credit managers have achieved! With the proposed changes, which are odds on to be accepted by the government and legislators, Banks will finally get some deeper insight.
Small business lending stinks and home loans are cool. That’s the message that we are getting in the press and in practice when we go and ask for a small business loan.
You have to feel for the small business bankers actually (well you don’t but having done the job once I do). They have a master that is telling them that they don’t like property security and to focus on cash flow lending, however they have a credit department who can’t get comfortable in today’s environment with business performance so they only want to lend if there is limited or no probability of loss given default – ie residential property.
There has been much written about Exporters who are currently suffering as a consequence of the strong AUD vs USD and other currencies. Importers are busy making hay and you would think that these favourable conditions would please their bank but know this: your bank is nervously watching you wondering if you realise that good times never last.
When times are tough, Banks will work hard to manage the risk of struggling clients. Not new news. However great banking customers know that when times are good, credit managers are paid to look objectively at the success and seek input on:
I am recently returned from a holiday in New York. I went with my gorgeous wife, a girl that I have been with for some 12 years. In all that time I have never known her to get quite so excited about shopping as she was in NYC. It was like hanging with an aroused shark. She tore from shop to shop gorging on one bargain after the next.
I have to confess to being impressed by many of the shopping experiences that I witnessed. Sales staff were attentive. Even though the prices of clothing were extremely discounted (up to 50% off prices that were already between 25 and 50% cheaper than we Aussies are used to) there were always plenty of staff to serve and they all did a great job of sucking every last penny from our willing wallets!
Bankers are very judgemental people. They have to be as they are invariably given limited information about their client and are expected to spot clues about risk from these. get it wrong and the banker might lose their job, or certainly have their pay impacted. If you are displaying any of these signs you may wish to think about making some changes to your business!
Melbourne, Vic July 15, 2010 Recognising that Banks speak Spanish and Business speaks Portuguese (they sound the same but are totally different languages) a group of Bankers have joined together to take away business owners need to deal directly with their bank with a new Bank Management Service.
Common business complaints about banks include my manager keeps changing and the bank doesnt understand my business. The Pearl Bank Management Service offered by Pearl Financial Services allows businesses to essentially hire their own banker, providing them with an expert to cushion the business from the day to day frustrations of dealing with their bank.
Melbourne, Vic Aug 20, 2010 Market leading commercial banking advisory business declares the lending drought experienced by Small Business for the last 2 years is over; with access to finance for Small Business expected to significantly improve this half.
Pearl Financial Services General Manager, Nathan Keating says:
As we are seeing in the recent major bank profit releases and trading updates, Small Business lending performance has been down. A key contributor to this has been the banking communitys concerns over the credit risk of the small business segment relative to other asset classes.
In Ian McIlwraith“s story about Clive Peeters today in the SMH, he observed that Clive Peeters had been forced to make $2m of principal reductions by its bank at a time when the business could least afford to do so. Whilst we are not in a position to comment on whether this is true or not, this is a common predicament faced by businesses that are struggling and all too often it is the fatal blow. However manage your bank better, and this need not occur.
Melbourne, Vic – July, 16 2008 – Contrary to popular belief, more and more businesses are finding that it is possible to have a satisfying and mutually beneficial relationship with a bank. The secret? Hire a banker.
Pearl Financial Services, commercial finance advisors based in Melbourne, have recently commenced a service whereby experienced commercial bankers, armed with actual financial analysis tools used by the banks, consult to businesses on becoming bank ready, prior to approaching banks for working capital and other finance requirements.
More and more there is becoming a right way to deal with banks, and a wrong way. In the current environment even the best businesses are having applications for new funds declined and calls by banks for existing facilities to either be reduced or refinanced. Alan Miltz, a leading authority on bank assessment processes, shares some pointers to assist CEOs avoid the pitfalls and enhance the way they communicate with banks.